00:10Ability to see things can be a thing of beauty,
00:17but it can also be a curse.
00:20And whilst it looks like a skeleton, it is just a flower,
00:24and it is just a faucet.
00:26So there are those people who argue, like Annie Nin,
00:29that we don't really see things as they are.
00:33We see things as we are.
00:36What I call the deception chart is that our eyes will seek out
00:40that which confirms the facts that we are seeking to establish
00:44or to prove.
00:46It gives us a bias of looking for things that we want to achieve,
00:52rather than looking at things objectively.
00:55Now, I don't know what children's games are here in the UK,
01:00but in Denmark, where I grew up, as a child,
01:04we would sometimes be given one of these drawing books that had numbers
01:09and then just a blank page.
01:10And our job was to connect the one with the two,
01:12and the two with the three, and so forth,
01:14until a beautiful picture emerged of a tractor and a house
01:18and a fairy Christmas, et cetera, et cetera.
01:21So it's not such a long stretch for us when we get engaged with technical analysis
01:26that we begin to connect one high with a secondary high and a third high,
01:30and we extrapolate a line out in the future,
01:33and we call that a trend line.
01:35And when a trend line has been broken, we get a signal.
01:38It's called a trend line break, and it's a thing of beauty because,
01:42hey, it looks so easy when we are sitting doing our research,
01:45and how many of us have not created fortunes on paper
01:49by drawing the right kind of lines?
01:51But, as I said, the deception of a chart,
01:55what we call apophenia, is playing a trick with us,
02:00meaning that we will gladly omit this trend line break.
02:04Yet, when we are trading it in real time,
02:08all of a sudden, we are seeing this trend line break.
02:11And so we are surprised when this happens,
02:14because during our research, it looked like this.
02:18There was a trend line break, and the market stormed higher,
02:21and we were on board, and now I'm trading it,
02:23and it's not storming higher.
02:25In fact, it's trading lower and lower.
02:27In this case, you actually do get saved by the bell,
02:29unless your stop loss was too tight.
02:32But many good strategies have been created on paper
02:36that are completely impossible to implement in real time.
02:42Mostly because, if you are looking at the Dow Jones Index
02:44from 2.30 in the afternoon until 9 o'clock at night,
02:47there are 78 five-minute bars,
02:50and you need to be present for every single one of them,
02:52or you might just miss that perfect trend line break
02:55that enabled you to ride the market up or down.
02:59So, many things I believe of charts,
03:02but many are things I don't believe.
03:05And I call this ignorance.
03:07Now, intelligent people can be ignorant
03:11until they have been informed otherwise.
03:13So there are things that I don't believe in.
03:15I don't believe in soulmates.
03:16I don't believe in horoscopes.
03:17I certainly don't believe that the Earth is flat.
03:19And I most certainly categorically do not believe there is such a thing as the perfect system,
03:26the perfect indicator, the perfect chart pattern.
03:30It simply does not exist.
03:32So, I think it's time that we embrace trading for what it really is.
03:36Trading for me is just a series of opportunities where I don't expect much,
03:42but I know that I will place a stop loss,
03:45which is in relation to how much I want to risk.
03:49But the whole concept of risk versus reward is another thing that I would love to take a shotgun at
03:55and put it to death.
03:57Because when we talk about risk versus rewards,
04:00how do you know what your reward is going to be?
04:04Well, you have a crystal ball?
04:06Let me give you a concrete example.
04:09I'm trading the DAX, and I decide that I want to risk 20 points.
04:13Being the studious trader that I am, I'm arguing,
04:18you know what, I'm going to risk 20 points, and I'm hoping to make 40 points.
04:22And in this event, I'm actually right.
04:24Let's say I bought the DAX at 20, and it begins to rally 40, 60, and it comes to 60.
04:32And I have now on paper made twice as much as I had risked.
04:36What do you think happens when we get to 60?
04:39Do you think I'm just going to say, that's it, I'm going to take my profit?
04:42Hell no, not the way I work.
04:44And my mind is going to go, well, maybe you should just hold on a little bit longer.
04:47Maybe it's going to go your way.
04:48So, the whole idea of presenting a reward target
04:53completely negates the idea of how profitable traders truly trade.
04:59They don't set profit targets.
05:05So, my trading boils down to a very, very simple philosophy.
05:11And I believe that good traders, truly profitable traders,
05:17they have a philosophy that is very different to the 70, 80, 90% of traders.
05:23And that's what I want to spend some time on.
05:27But I know, here I have an open position from my trading platform, and I'm about 70,000 pounds in profit.
05:35If I remove a couple of noughts from that, and I would be 700 pounds in profit.
05:41I absolutely categorically know that if I can do this, you can do this.
05:46And I didn't start trading this size.
05:49I didn't arrive at the trading game with a silver spoon in my mouth and a massive inheritance.
05:59There isn't that much money in nursing and in vacuum cleaning repair.
06:03I had to fight my own way.
06:05But through a very, very focused and dedicated approach to trading,
06:09I managed to build up to trading this trading size.
06:15When I started trading, I've had an account with CMC Markets.
06:19My stake size was two pounds a point, then three pounds a point, then five pounds a point.
06:25And every single time that I grew my trading size, I felt that little flutter of nerves.
06:33What I would like to help you answer today is what is your trading philosophy?
06:39And is that trading philosophy actually aligned with your own best interest?
06:45See, let me help you try and answer this question.
06:49Maybe just something for you to think about.
06:52Maybe not right now.
06:54But if you want to make a lot of points in the market, you can have two approaches.
07:00You can risk a lot of points to make a lot of points.
07:03Or you can risk very little.
07:07But then you need to be prepared for the possibility that you will be repeatedly wrong.
07:13And at this point, I would love to tell you the story about a colleague of mine in the industry.
07:18A right old nester that I have a tremendous amount of respect for.
07:23He managed a fund trading South African shares on a one-minute chart.
07:29Yes, I didn't even know that you could run a hedge fund trading on a one-minute chart in South African shares.
07:36But they deployed a strategy invented by Tom DeMarc called the Tom DeMarc Sequential Indicator.
07:42You may have heard about it.
07:44Please don't ask me in-depth questions about it because I am most certainly not an expert.
07:48I have a rudimentary idea of what Tom DeMarc Sequential Indicator is about, but I am not an expert.
07:55However, what I found incredibly refreshing, ladies and gentlemen, was that my friend was telling me,
08:01you know what, we had a hit rate that was around the 20s.
08:06At times when we were on a good run, we would have a hit rate around 30, 35%.
08:12So for those of you who are not familiar with the percentages I am talking about,
08:16it means that they generally was right 20 times out of 100.
08:22How would you feel about trading a system where you are wrong 80 times out of 100?
08:29Does that sit easy with you?
08:31Aren't you more inclined to believe those glossy adverts whenever you Google something,
08:36those adverts that will promise you a 90% hit rate or a 100% hit rate,
08:41or with this system you'll never lose?
08:43Who in their right mind would trade a system that is only right 20% of the time?
08:48Yet, my friend did it and they were wildly successful.
08:53To the point where they said, this is it, we are not younglings anymore.
08:58We made enough money, let's just take our spoils and bugger off to sunny shores.
09:05We've done our job.
09:07I asked him, did it bother you that it had a hit rate of 20%?
09:11He said, why would it?
09:13The way that we traded this was that whenever the market didn't go in our favor immediately,
09:19got out. Done.
09:22While you're sitting there in your positions day after day, hour after day,
09:28after hour hoping, wishing, praying that the market is going to turn around.
09:33Not them. It requires patience.
09:35So, I could have come here and I could have spent the next two hours going over one trading rule after another.
09:43But I would like to take some comfort in me doing the right thing by quoting one of the best traders ever.
09:51Richard Dennis, a famed commodity trader who were the founder of the trading group called the Turtle Traders.
09:59And he said, and I quote, we could post our trading rules on the front page of the Wall Street Journal,
10:06and still people would not be able to make money from them.
10:10So, the best thing that I could do over the next two hours,
10:14which is probably no longer two hours, but more likely an hour and a half,
10:18is to hold a mirror up in front of you.
10:21And if you want to fall asleep, by all means fall asleep.
10:24It's quite alright.
10:26I can live with that.
10:28I've had people fall asleep before.
10:32No particular person intended for that comment in here.
10:38I want to hold up a mirror, ladies and gentlemen.
10:41I want to show you who you really are.
10:45Not being personal, but based on the experiences of a guy who spent every single day from 7am until 9pm,
10:58because I didn't have anything else to do, watching you trade.
11:03Maybe not you personally, but you as a whole.
11:0812, 14 hours every single trading day for a decade.
11:14Watching your mistakes.
11:17Watching you sitting there, hoping, praying that your position is going to turn around.
11:22Moving your stop loss further away so you don't get stopped out.
11:26Cutting your profits so soon because, hey, who can go broke taking a profit?
11:32Yeah, you did.
11:34You managed to go broke over and over because you're always snapping at the profit,
11:38because you didn't understand fear.
11:40You didn't understand what was going on in your minds.
11:44And I'm not belittling me, you know.
11:46And now I am not talking down to you.
11:48I am genuinely trying to make you see trading from a very different perspective than you perhaps have addressed it from before.
11:58It all starts with awareness.
12:00Every morning I go on the scale and I notice the trend.
12:05A trend of I am getting heavier and heavier.
12:08And so I began, I'm sure you people don't have that problem perfect as you are,
12:14but we Danes, you know, we like our bacon and whatnot.
12:17And I look down on the scale and going, I'm a little heavier than I was last month and the month before.
12:23So, you know, I do the typical approach.
12:25You know, I try Atkins.
12:27I try Fibonacci.
12:28I try keto.
12:30I try stochastics.
12:32I try paleo.
12:34I tried Bollinger Bands.
12:36I try calorie counting.
12:38I try a weekend course.
12:40Am I getting through to you here?
12:42I don't want to lull you asleep either.
12:44I love to make it entertaining.
12:45But I actually have an important message that true profitable trading starts with an awareness of where you keep going wrong.
12:53And so it happened that I signed up to this app.
12:57It didn't cost a terrible lot of money.
12:59Ten pounds for four months.
13:01And in there I lock what I eat.
13:04And it's quite fun.
13:07So it happened last week that I was presented with a steak.
13:11Now, I don't eat meat very often.
13:14You know, when you hit that age of 50 and beyond, you try to cut down your meat and your dairy because you want to live long and healthy and prosperous life.
13:22But there it was.
13:23And you can't say no when someone's made it.
13:25And with a good steak comes chips.
13:28And what comes with chips?
13:30Well, mayonnaise, of course.
13:33Or for you, ladies and gentlemen, here in the United Kingdom, vinegar, if it was fish and chips and vinegar, till your lips were blue.
13:40But we Danes, we like our mayonnaise.
13:43And so I took a good old wallop of mayonnaise and dashed it over the chips.
13:47But when it came to registration time, what we call the day of reckoning, I added 350 calories for the chips.
13:56And then this harmless little looking wallop of mayonnaise handsomely dashed on top of the chips was another 300 calories.
14:05And I looked at it and I became aware that that little misstep, if you call it that, had added 750 calories to my daily intake.
14:16And considering I'm trying to keep myself to 2,100 calories, I'm thinking, did I?
14:21Was it really worth it?
14:22Was it worth to eat a third of your daily intake on a couple of chips and some mayonnaise?
14:28And I said, no, but it started with an awareness.
14:30So the next time I had chips, I said, no mayonnaise for me.
14:33Thank you very much.
14:34I think that's something nicer than mayonnaise.
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