Best Loser Wins - Flip The Switch

hi tom who got here i'm sure you've seen a multitude of youtube videos and tick tock videos of traders that are portraying to give you some wisdom based on what happened after the fact what i'd like to do over the next 10 or 20 minutes is to give you an insight into the mind of a professional trader and how he flips the switch how he goes from experiencing a set of adverse circumstances and turning those circumstances into something that may not necessarily yield a profit but at least it yields the re the correct kind of action the correct kind of process you see one of the objections that i have with so many of the youtube videos and the tic tac videos uh tick tock videos that that i am accustomed to every single day is that they're always focused on the outcome oh i made so and so much they never lose i made zone so much or hey i just finished my trading and now i'm off to the spa or hey that's the outcome but hey i want to see what you're going through what is your process and that is that is hopelessly devoid in any of the videos that that i personally witness so i wanted to make mends and attempt to show you how you turn an adverse morning into an uh a or should we say a a morning where you are following the process and where you're doing the the right thing doing the right thing does not necessarily mean that you will make money but at least then you'll know that over time by always doing the right thing you you will give the odds of success significantly with your weight the odds of success significantly in your favor so what i i'm telling people in my telegram channel is i'm i'm process orientated and the outcome will take care of itself when i put on a trade i don't know what's going to happen i just focus on the process and i want to show you how that translates when you're having a pretty bad morning the article that i'm referring to here is also going to be the title of my first trading book it is called the best loser wins and you will find that article under trader tom. com and click on resources so essentially what this video is about is what actually happens when happens and how does someone like me who is not focused on the outcome but is focused on the process how do i deal with an adverse set of circumstances and i want to take you through the trades of this morning because i think they will teach you a lot and they'll give you some really beneficial insights into how you can adapt that peaceful mindset especially when things are rambling around you and you're not having quite the results that you are hoping for this morning in the ftse index the uk 100 rolling index the first thing i did was i drew the retracement lines during the night so i saw a retracement here during the night and i drew a blue line to signify that and i copied the length of that blue line over here and once the foot started reaching this level here i thought this is going to be a support level and i initially started off by buying the ftse at 7436 of course this is all in real time this is not after the fact and that i think that's a that's a really good and important pink thing to point out here is that i'm not a an after the fact teacher i will do this in real time on my telegram channel so when when i post a trade that i'm going along at 7 436 that's time stamped in that right moment and so anyone who is watching that moment we'll be able to see right the foots is trading at 7 436 or 37 or 35 because there will always be a little bit of latency a little bit of lag when you're posting trades on telegram so on my first trade i executed at 36 and then what i do as a trader is i have this principle is that when you are in a profitable trade you should attempt to add to the winning trade see much though of the premise of how i trade is not focused on how the winners trade no and then this may sound a little bizarre but my focus is on trying to avoid to trade how the losers are trading and considering that some 19 95 percent of all traders that are engaged in retail trading are net net losing traders and having worked at a brokerage for a good 20 sorry 10 years of my life i have a really good insight into what i need to do in order to avoid being the 95 percent and being and by being avoiding being in the 95 percent i inadvertently put myself into the five percent so what i do when i am in a profitable position and it begins to move in my favor is that i'll add to the position so i bought a 36 and then i bought again at 37 and then i bought again at 42. now you'll see from the timestamps that they're relatively close to each other and you're going to laugh at me now and every right too but i am getting out of this trade here just around eight o'clock uh around this price level here at 51 and 53 and yes i see it just as well as you see it that the foot she actually rallies another 50 points without me now why did i get out well i got out for a multitude of reason once there was a double top secondly the amount of times that i have witnessed the ftse index doing a u-turn exactly at eight o'clock in the morning so this was my way of playing the pre-market and you know quite quite significantly sized too and with a good profit of course i would have loved to have been on board but it wasn't part of my game plan at least not for the open okay so far so good and you'll probably say well you know where's the flips where's the flip and switch on this because so far everything is going right yeah but just wait just wait a second because what happens next this is the ftse on a 15 minute chart after the open it zooms higher but that's not really what becomes interesting what's interesting here is that the next 15-minute chart goes all the way down here and i want to show you what happens when someone like me could happen to anyone gets fooled into a trade you see i started shorting here so on the 15-minute chart this is what it looks like over here and around here i actually start selling short now you have the same chart here that you have over here but this is on the five-minute chart and what happens here is that i spot this downturn and i start shorting here initially at 48 and then actually do something that i rarely do but i do it if i have a very tight stop loss is i add to my losing position here it is something that i perhaps do one out of a hundred you'll rarely see me do it but i did it in this case and then lo and behold i get stopped out out of here just up here and it's it's deeply deeply frustrating so what is my point here well my point here is that when you are uh witnessing a very sharp sell-off like the one you've just seen on the five-minute chart what i wish i had done instead and i did actually do it but not until about three or four five fifteen minute bars later is i executed a short position because what's significant about this bar here is that it closes below the prior bar closes below the bar before that and it closes below the body of this bar here so this bar here actually got more more much more confirmation so what i've essentially done is i have zoomed away from my my five-minute chart over here and i zoomed out on a 15-minute chart so that i get a better overview and i think that is um a very important lesson to pass on to you that at times we can become overly flustered by the noise or the activity of what happens on a five minute chart or if you're trading on a two-minute chart or a one-minute chart but when you want to get a bigger picture of you and perhaps especially after you have just been sucker punched in by a couple on fortinet trades by by selling short hair and then getting stopped out up here it might actually not be a bad idea to just take a step back zoom out on a bigger time frame going all right i'm gonna wait for a better entry signal on a longer term timeframe and that's exactly what i have done here i noticed this bar closing here and immediately that this bar closed i call it cell on close and this is a concept i just want to repeat that i call it sell on close it means that the moment that 15 minute bar closes bang i go in and i sell short i get a fill at four hundred and thirty of course all of this is uh time stamped but you also notice that i do it in a slightly smaller size although you won't be able to see that and here's my entry i'm selling short twelve hundred pounds a point at 7 47.

the reason why there is a discrepancy between my price and the price that you're seeing on telegram is you know it's one point different but is i will actually post what i see on the screen at the time of the trade so i might get filled at 47 but if i see that 48 is able to trade on the platform that's the price that i will post on the uh on the telegram so this is where we were selling short here and then the rest is history as they say but there is another important lesson if um and of course i i add to my my winning position here i add another 50 at 7395 and then i get out here at just around noon i think there was a double bottom at the time and uh well it was a good trade what i would like to point out on a 15-minute chart is that it very often is a lot easier to move your stop-loss down because i use as an overriding principle is that if the market doesn't get above the high of the prior bar then i can move my stop loss down so down here the market did not get above the prior bar so now i can move my stop-loss down and i can move my stop-loss down now you may say well why didn't i make my stop-loss down here well because in order for me to move my stop-loss down i need to see the market make a new low we're making a new low new low new low new low new low but this is not a new low this is what we call an inside bar that means that my stop-loss actually stays up here just above it and then once i started seeing the market trade below the low of this 15 and a bar here i added to the position and then i decided to take my profits down here at about 60. it wasn't quite the low but you know i don't get of the lows i wish i did so the lesson that i wanted to pass on to you here is or what i would call the moral of the story what is the moral of the story there but there's as i see it is that there's several a handful of points that's the moral of the story the first one being here is that in order to flip the switch you need to gain some kind of composure you need to calm down your your mind which is perhaps fearful of losing again after you've just been stopped out the way that i do that is i i keep my mental composure by switching from a shorter time frame into a longer time frame and i also reduce my stake size so normally i will trade up to three thousand pounds a point but here i'm actually just trading about a thousand twelve hundred and i add to my position once i actually get some kind of confirmation that the market is moving in my favor so for me flipping the switch is part something that you do from a mechanical point of view when you're trading it it practically means that i am fl i'm switching from a shorter time frame to a slightly longer time frame in order to calm down my mind but it also is a reflection of a belief that i have about how fear and how mindfulness fits into trading i don't believe that we as professional traders can go through a trading life without on a relatively frequent basis being subjected to fear impulses this morning has been an outstandingly profitable trading morning for me but it's certainly if you followed me today you'll also know that it was at one point a significantly big losing day and i simply had to just calm myself down and get back to focusing on the process and while i don't sit necessarily and meditate in a darkened room with a candle lit in front of me i am very mindful of how fear and how the absence of fear makes for much better trading decisions and sometimes i'll use visual imagery in order to train myself into fearful train my mind into fearful positions and then simply by being exposed to these images i i mentally imagine myself being there and then i calm down my breath and i begin to focus on the process rather than the fact that there's 1200 feet of abyss below me or that i am down by 58 000 pounds on the morning and i focus on what i have to do which is just being in this moment right now and then focus on the next bar focus on the next bar focus on the next bar because that's how a professional trader will inevitably end up thinking if he wants to be professional you can't scream and shout the screen thinking that's gonna make any difference you might feel a little better by yourself by getting the aggression out of the system but actually in in my mind you're much better off if you begin to focus all your energy on process process process and i hope this video will give you some tips into how i focus on process now that i got you here if you want to see me trade live i will be trading live on the 1st of april together with this gentleman over here mr larry pasavento and the following day we'll have al brooks and steve ward and dr david paul who will be all be entertaining on the saturday and sunday so friday i'll be trading live and it'll be a non-farm payroll day and it'll be the first of the month so i am sure there's gonna be a lot of excitement uh sorry sorry i should have said a lot of volatility not excitement because we're trying to we're trying to calm the excitement down so but by implying that there's excitement it also means that perhaps we're making irrational decisions and actually at all time we want to be pretty stoic about it and we want to be calmed down and just follow the process rather than being result orientated we are process orientated now you can uh you can go to my website tradertom. com and in there you will see a banner on the top of the page that'll lead you to a link where you can read more about the actual three-day course the three-day course is actually incredibly cheap it's priced just around the twelve hundred pounds depending on your what to three out brooks books and if you don't want them it's just about a thousand pound which is pretty astounding for a a three-day seminar okay that's all for me for now i hope you enjoyed this i hope that you would be able to take something away from that and how i am able to what i call flip the switch and if you don't know what flip the switch mean then i urge you to go to my website tradertom.