039: Tom Dante – Speaks to the Competitiveness of Trading and Essential Skill Sets for Profitability

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chat for more information. Tasty Trade Inc. is a registered broker dealer and member of Finra, NFA and SIPC. The biggest secret of the best traders in the world is that they're just like everyone else. However, they've worked hard to learn the markets and discover what works and what doesn't. But how can you And get in on the stretch. You can do it. with traders. Here's your host, Aaron Fifefield.

Hey there, what's going on guys? Welcome back to another episode of the Chat with Traders podcast. Thank you very much for tuning in and this week we're up to episode number thirty-nine. Now I had the great pleasure of speaking with Tom Dante, who many of you may already know from Twitter as Trader Dante. Uh but if you don't, that's cool. I'll give you a real quick snapshot now.

So Tom's a day trader from London who pretty much tells things exactly as they are. I mean he makes no attempt to soften the blow from the harsh realities of trading. So I mean that's something we really value already. And he's got a really interesting and unique story about how he got started trading, which was around 1999. And from that point on, there was a period of about seven years where Tom really struggled to gain consistency with his trading results.

So that's something we dig into and speak at lengths about during the first part of this interview. Now after developing a track record of profitability, Tom joined a prop trading firm where he learnt many of the solid trading principles that have shaped him into the trader he is today, and again, many of which are discussed during this episode. Nowadays, Tom is an independent trader who focuses mostly on the bond market intraday as well as other futures.

And besides the few points I've mentioned already, we of course discuss much more, including the competitiveness of professional trading, the importance of learning from your mistakes quickly, and the real cost of becoming a great trader. Now besides a standout guest on the show today, I also have some exciting news to share with you. Chat With Traders is now offering a new service to those who are serious about developing and moving forward as a trader.

That is a dedicated one-on-one coaching service. Every week I receive at least a few emails from listeners asking how they can find a trading coach or a mentor, like someone who has greater success, knowledge, and experience than they do themselves. But the tricky part of finding someone like this who is genuinely prepared to share pretty much everything they know in order to help you progress is of course finding them and then gaining access to them.

And this is the reason why I'm excited to announce this is because the barriers to intensive one-on-one coaching, I feel, have now been removed 100%. So there is currently three trading coaches on the Chatwith Traders team who are readily available, who are prepared to block out their time and have one sole focus, which is to help you perform with greater results as a trader.

And best of all, they can provide you with as much or as little ongoing support and mentoring as you need. So let me briefly introduce you to each one of these coaches. So we have Chris Sace, who was a guest on the podcast for episode number thirty-three. He's a swing trader of equities and he's been trading since around 2008 with a great focus on following trends and riding momentum.

And we also have Zack Hurwitz, who many of you will remember from episode eleven of the Chatwith Traders podcast, and he also featured on episode 25 as well. Now Zach is a day trader of options and equities and has been since 2007, emphasizing intraday and swing trading of the volume weighted average price. So a real emphasis on VWAP. Um and thirdly, we have Brad Jelenik, who was a guest on episode twenty six of the podcast.

And he's a prop trader and has been since 2003 with a strong focus on capturing intraday moves with global futures markets. So, all in all, three genuine traders who are there to provide you with the help, support, and guidance you need to continue improving. To learn more about this coaching service and to book a session with one of these guys

Just go to chattwithtraders.com forward slash coaching. In case you missed that, that's chattwithtraders.com forward slash coaching. Very straightforward. And of course, if you have any questions about this, you can always email me. My email address is just Aaron at chatwithraders dot com and I can answer anything you're unsure about.

Now let's dig into this week's interview. I'm your host, Aaron Firefield, this is the Chat with Traders Podcast, and here is this week's guest from London, UK, Tom Dantey. Tom, what's up man? Welcome to the podcast. How's it going? Okay, Aaron. Thanks for having me. I'm really, really appreciate being here.

Um I've seen your I've seen the website, I've seen uh you know, a few of your uh or listened to a few of the interviews and they're they're really fantastic. So I'm I'm really happy to be here. Awesome. I really appreciate it. And I mean, thank you very much for making the time to speak with me today or this evening for you. I mean, we've been trying to set this up for quite some time now, so we've got a lot to discuss. But um yeah, so I mean we're gonna talk about your path to profitability.

in a fair bit of depth because I think this will really resonate with with quite a few listeners. Um we're also going to discuss your style of trading um and just cover plenty of tips and pointers for um other traders. So I think there's gonna be a lot of value in this, but let's let's get this underway and start with

Um when did you first discover the markets? Like what was it that appealed to you? How did you come across them and even take it back a step further to to let us know what you were doing before this time? Okay. So it's nineteen ninety nine, right, and the market is on fire. But I don't know this. I mean shit, I barely even know what the mark Because I was 20 years old and to be honest with you, I was more interested in girls. Um now my sister came home one day and I heard her telling my mother.

how she'd saved a little money from her job and invested some money in the stock market and how she was just making incredible returns. And I think many people kind of get started in the same way. Um, they hear about the market from friends or family, but I was particularly keen because my sister is a very influential figure in my life.

Um and just to give you a little bit of a backstory there, um when I was just three years old, my father passed away from a sudden heart attack, leaving my mum, a widow in her thirties with three children, my two sisters and I. And I was particularly close with one of my sisters because she took a very kind of maternal role, really looked out for me when I was growing up. And she kind of became a second mother to me.

Um and so the reason I'm telling you this little backstory is because it will really explain why I managed to be you know, to become so enamored by the idea of trading stocks because I'd be listening to her and I'd be hanging on her every word.

And you know, she'd be telling my mother how she was buying these stocks and boy were these stocks paying out. And it was a period, um, as we know now, uh, you know, round the nineteen ninety nine, um, which we're probably never gonna see again, where almost on a daily basis stocks were just having these parabolic moves and she would be literally doubling, tripling her money in unbelievably short space of time.

Now of course I didn't jump right in because I was just twenty years old, I was still studying at the time, I had literally no money to my name. But her returns kept increasing. So eventually I kind of decided I'd better do something about this, I'd better get involved, and I scraped some money together and limped into the market.

Rydw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n ddw i'n dd Uh which is a very small amount of money.

And right off the bat, I just proceeded to voraciously buy stocks. Um, there was no rhyme or reason in it. I would literally look down the paper if a company name appealed to me or there was a headline story on a company and it was positive, that was in. That was it, I was pying. Um, and when I look back on it now, it was just a complete recipe for disaster, and I'll tell you why. Basically. The broker that I set up an account with Um we had to pay fifteen pounds.

both to get in the trade and to get out of it. So that was 30 pounds commissions for a round trip. Now on a 500 pound account, that basically means the the commissions account for 6%. So basically, to cut a long story short, um The stock had to go up six percent for me to break even. And bear in mind that I could only go long the market. I couldn't go short at the time because the broker wouldn't allow it. So I had to be long only in one of history's major bear markets.

With the stock needing to go up six percent for me to even make my money back. Um now I know the game is hard when you start out, but that's beyond hard and verging on the impossible. But I kept that up for several years and a lot of the time when I tell people how long it took me to get profitable, people ask me, Well, you know, why did it

And the reason it took so long is because I was just the idiot that does the same thing every single day hoping for a different result. I mean it's i under those conditions, it would be Incredibly hard for anyone to make any money, let alone a complete beginner. But there I was just buying these stocks every day and losing money. And eventually the account would get blown. I'd refund it and start again. And the same thing would be happening.

Um and you know, obviously from time to time I did have, you know, a few stellar stock pits stock picks, by pure chance, um, I'd happen to stumble onto the right stock at the right time and it would shoot up and I'd actually make some money. But that kept me playing the game and that's what keeps everyone playing the game because you don't lose.

you know, every single trade that you make. Even the worst trader in the world is gonna win from time to time. And as soon as you get that win, it fires you up and it reignites the whole dream. So it just keeps you going. And I remember uh and I'm probably kind of paraphrasing now, but I remember a a quote from Reminiscences for Stock Operator where Um i it basically explains how

If you lost every single trade that you took, you would probably learn a lot quicker than what happens in actual fact is is that you do have these wins. Sometimes you do in fact have win streaks as well. and and you know, you might not be profitable but you put together a week, a fortnight, sometimes even a month or two of winning and you think you've cracked it and you haven't, but it just it it it all takes so much time.

um to find out, you know, whether you've made it and what's going you know, what's going on. Um at any rate, I kept up this, you know losing process of buying these stocks and not making any money for four years, if you can believe that. Um, before I really realised that essentially what I was doing is completely gambling and that I couldn't beat the market without

A being able to short, you know, because that was going to be a m you know something that would massively help me if I could actually short rather than having to be long so I was constantly against the trend. Um B either having more money or getting lower commissions. And C um having a strategy that was a lot more robust than simply randomly betting on companies that I liked, you know, the sound.

And then in 2004 I came across spread betting. And that is simply a derivative where we can bet on price fluctuations. It has major advantages for UK citizens because we don't pay tax on winning. And that really changed everything for me because it opened up a lot of doors. It it opened up doors in terms of new markets that I could trade. Like now I could trade forex, commodities, bonds.

um stock indexes as opposed to just stocks. And I didn't have such extortion at commissions. And what's more, I could go both long and short. And at this point I thought I've hit the big time, you know, now I I I've got what I wanted and now I can settle down and start making money. And I nearly did, but not because I'd worked out a way to beat the market, but instead I actually worked out a way to beat the broker. And I hit on something. that made me a huge amount of money really quick.

Um and I'll tell you I'll tell you what happened. I I often explain this in webinars and people find this really fascinating. It doesn't happen so much these days, but I'm sure there are still opportunities if you look hard enough. But I used to open as many accounts as I could because they would give you bonuses to entice you in. So for example, they might say fund an account with

50 pounds and we'll give you 150 pounds to kick you off, start you off. Um so I'd open a lot of these accounts to get these bonuses. And one day I had two accounts open. And I was watching the Dow, and it was a minute or two before 1.30, we had some tier one data uh to be released, and the news came out, and I noticed that the price moved with one broker and not with the other. And then it moved with the other about six to eight seconds later.

And I thought that's odd, that's odd, there's a lag there. Now the next day I watched exactly the same thing happen. Well by day three, you know, you better believe I was ready to catch. it. I would literally hit the market with the lagging broker, taking the directional cue from the faster one. So I'd see it go and then I would know which way to basically trade and just hit the market. It was like seeing the future. It was absolutely incredible.

And I made a lot of money doing that, basically um, capitalizing on the broker lag. And the best thing was that the broker just let me keep that money. Um eventually they did shut down that loophole. So their prices came in line, but Which was disappointing, but at least I got to keep the money. But that kind of spurred me on to search for more brokers that might be making these errors, and I came across several more where I could actually take advantage of mispricing.

Um I remember one now and I'm not gonna I'm not gonna give the name but they would be erratically spiking prices every few minutes. Like you see for example crude oil would be say Let's say 50 bid, uh 50 oh five offered, and it would just be, you know, quietly trading, and then suddenly it would have a dollar spike up and a dollar spike down in literally two to three seconds. Rydyn ni'n gwneud hynny. Rydyn ni'n gwneud hynny. Rydyn ni'n gwneud hynny. Rydyn ni'n gwneud hynny.

And I would just you know, I'd see that and I would hit it. So I'd see it spike up a dollar, I'd know I could sell and I'd also obviously have other brokers and I knew that the price of oil had not spiked up a dollar. So I'd hit it, it would come straight back in line, and I'd make like a you know a hundred ticks, sometimes more in seconds.

And these were literally some of the best days of my life. Like I was on top of the world uh because it was free money and I was making huge amounts and it was that point right there. where I knew that I was gonna be trading for the rest of my life because Although betting on broker errors is not a legitimate strategy.

you know, by God, there are very little feelings like the ability to make hundreds, sometimes thousands of pounds in seconds, and you know that trading is a result of that. So I knew it had me hooked from that point then. Um All of these brokers, incidentally, with the exception of just one, let me keep the money. One just took it out of my account and wouldn't let me have my winnings, but all the others let me keep.

Um and eventually those loopholes all got closed down. And that is when around about 2006, six years after placing my first ever trade. I had a fairly big pot of money, but now I had no means to make more because they shut these loopholes down and suddenly I had to learn how to trade properly.

And that really is when, you know, the proper journey started because now I had to look at the market and think, well, hang on a minute, I haven't got a guaranteed edge here. You know, so so how am I going to find it? Um and as I say, that's when the journey starts.

Yeah, I mean that's that's quite a story. That's a it's a really interesting one. So I mean, what was your next step from there? Like as you said, you've got a you've got a big sum of money there, but you don't know how to turn that into to more money. So what was your next step moving forward?

Right. So at that point what I started to do is I started to frequent forums and I started to look around and I started to try and learn um how to trade. And of course you know, I I I mean at this point in time I had had very little um

uh understanding of technical analysis or fundamental analysis because I'd literally been just looking at the ticker and taking advantage of, you know, of of pricing errors. So I wasn't looking at things like head and shoulders, trend line, support, resistance, any of that. So I took to these forums and I started reading, you know, various different strategies and I just started trading. Um and I started losing. You know, straight away I started losing that large sum of money that I had made.

And I started losing it because um I was just, you know, a again, just trying things out, but with no real rhyme or reason. Um and then in two thousand and six I happened to come across the what is called the James Sixteen Group on Forex Factory. And I think it's one of the largest threads on that website and I started to read uh the thread, read up on price action, begin to understand the dynamics

support, resistance and market structure. And it really made sense to me. And I applied myself to it wholeheartedly, really studied it, watched the market with these frames of reference in mind. And I started to be able to anticipate ymwneud â'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau. started to really improve after spending time studying price action uh from learning it from that thread.

Despite the fact that I was able to now read the market and in many cases call the market effectively, I still was not making any money at all. In fact, I was losing a lot. And the reason that I was losing a lot is because I was just basically trading way too long. And the reason I was trading too large now comes kind of right the way back to the broker errors. Because I had made so much money so quickly. Um

I thought that was you know that was standard, that was par for the course. So suddenly it doesn't seem exciting anymore to bet small when you've when you've been used to making hundreds, sometimes thousands of pounds in seconds.

you wanna get that thrill again, you wanna bet large. So essentially what I was doing is is just betting way too big and having these big losses. Um And of course that's why I wasn't you know I wasn't really getting anywhere, because I would just uh you know undo winners um very, very quickly by just consistently betting way over the top of what I should.

Okay. So during that time uh during that time, was there a point when you thought, Okay, maybe they're like I don't know, the the good days have been and that and they've now gone? Is this still appealing? Was there still opportunity? Um, like what motivated you to keep going from there even though you you'd been consistently winning and now you were consistently losing? Like why did you keep pushing forward?

Well, what spurred me on was the fact that I could see that I could call the market correctly. So, when you can anticipate market movement... You have a lot of confidence. And when you then fail to capitalize on them by really what can only be deemed as idiotic errors. you you know, you kinda berate yourself and you think, Oh, you know, that was that was so dumb of me, but you keep going because

You you you know that you can call the market, right? If you looked at the market and you just had no idea where it was going and every time you came up with an idea it was completely wrong, I'm sure after a while you just think, you know what, this is ridiculous, I can't do this anymore.

But it was it's it's very strange and I think a lot of traders go through this'cause I see it, you know, as a mentor when I'm when I'm teaching traders, I see students say things like, Right, I think the cable is gonna bounce. And lo and behold, cable has a perfect bounce right off the level they've anticipated. And I say to them, Okay, so how much money did you make? And they'll say, I didn't trade.

I'm saying well why not and I'll come out with an escape Oh well, I took a trade before and it lost money, so I second guessed myself and I didn't take it or

Um you know, what have you, or I did take it and I got in and I got five pips into profit and then it stalled and I got nervous and got out and I didn't manage to capitalize on the big move I expected. There's always an Um but this is what I I guess what I'm saying is that this is what spurred me on because I could see that I had some talent, I just had to translate that talent into money.

Which is the highest part of the game. Absolutely. So at what point did you start to to turn the corner and start seeing some consistency? Like were there any standout aha moments? N what happened with me is that after a a long while of betting too big, I had run my accounts right down. Like I I was back to basically having to bet really, really small. And You know, that was that was a problem for me. For a long, long time my biggest psychological issue in trading was.

was trading my P and L. It was a problem when I was trading too large and it was a problem when I was trading too small. The problem when I was trading too small, and I I see people talk about this a huge amount. I think it resonates with a lot of people, is that What would happen is as a swing trader, I would sit there and I would wait, I would patiently stalk my trades. Okay, I never had a problem with anything like patiently trade trades trades trades trades.

Um but I could sit there and I could sometimes wait a day or two for a trade if need be. And I would then eventually get in the trade, but because my accounts have been so depleted, I would be back to betting very small. So I might bet something like one pound per pip increment that the f that the FX pair moved.

And I'd think, right, it's gonna bounce from X level here to Y level here. And I would get in and it would have this, let's say, 30-pit bounce. And I would look at my PL and I would be up, say, 30 pounds. And I'd think to myself, That's just nothing. That's just nothing for a whole day's work. So I'm gonna try and run this trade.

And you know, you you know what it's like. You come onto a higher time frame to try and justify running the position. So I go onto the daily time frame or the weekly or the monthly. Some time frame's gonna corroborate the idea of running. And many, many times that trade would just come right back on me. So I'd be up 40 pits. It's back and I'm scratching it. I'd be up 30 pips, it comes back, and I'm scratching it because I was always trying to run it.

Um I say this to a lot of guys um when I when I hold webinars these days. I say when people you know, they post on Twitter and they say I'm I'm in a trade and I'm up two thousand pips on the Euro dollar and they point to where they got in on the chart like three months ago.

Either they're a hedge fund or they're a guy trading a micro lot. I'm telling you. Because it's very, very difficult to hold those trades for long, long periods of time if you've got sizeable amounts of your own capital on the line. Um And it's you know, it it is a bit easier if you've got small amounts of money. But um as I say, I didn't want to take these quick exits because I just felt like I wasn't making a lot of money. So again, what I was doing is I was just trading my PL. And

The question that you asked me is was there a point when I, you know, I made that transition and I realized that I couldn't do this anymore? And there was a specific point, and that point was When I wrote to my mentor. that was on the James 16 thread. And I was very, very disgruntled because I just couldn't make any money, you know, trading my PL. And I wrote to him and I said, you know, this strategy is fantastic and I want to thank you for teaching me it. But

Ultimately, I just can't make any money. I just keep trading my PL. And Of all the answers he could have given me at this point, right, to to to one of his students, what could he have said? He could have tried to uh help me get my, you know.

to get my mojo back, to to to feel good about myself again, he could have said, well, you know what, keep plugging away or, you know, don't trade your PL or or anything. He could have said anything positive, but he didn't. He wrote back and he said Well, you gave it a go, but I guess you're not cut out to be a traitor.

And when he said that, I was like, Oh no, no, no, no, you didn't just tell me that. You did not just tell me that. And that really spurred me on because I'm s I'm like an ultra competitive person. And that's not always a good thing. Sometimes it can piss people off, but I am really, really competitive. And when somebody told me that I could not do it, that is when. I was able to perform.

At the top of my game. Absolutely at the top of my game. I've always been like that. If we get on to later in the interview, I'll tell you about how I got into prop. It's the same thing. I only got into prop after they initially rejected me and told me I wasn't good enough. You know, so it's it's kind of like um I have I I need to be spurred on to do something. And when my mentor told me that I wasn't good enough, that for me was my breaking point. And at that point I realised that, you know

Either you change your destructive behaviour or you bow out of the game. That's you know, you've only got two two ways you can go at this stage, but I was not gonna be told that I wasn't good enough. So I just I absolutely

I said to myself right then that I was gonna trade as small as it took to grow my accounts, but grow my accounts is what I was gonna do and I was gonna come back in six months, one year, however long it took, and say, Well, you know what, you were wrong. I have done And as I say, that that's what spurred me on that competitive nature that I've got that just that refusal to be told that I can't do something.

Absolutely. I think that's a really great trait to have. Um, like you mentioned there Um so I mean that was gonna be my next question was about how you got into prop. Like why did you decide to go and trade within a prop firm instead of continuing to trade on your own? So so tell us a little bit about that. Right, so I was making money at this stage.

And I'd I'd kind of as I say, I'd knuckled down, I was taking it seriously, I refused to trade my PN anymore. I had to be uh very disciplined in order to just understand that I was gonna have to bet small and grow, you know, slowly and that it wasn't, you know, it wasn't gonna be um a sprint, I was gonna have to be a marathon, a very cliched saying, but very true nonetheless.

Um so I was I was making money and I was I was showing growth, but it was quite slow. And I'd often you know, I'd I'd heard about prop firms and I'd I'd often wondered if I could kind of fast track my progress by having, you know, access to more capital. But also at the same time, at this at this point, I've been profitable several months. And I started to think to myself, I wonder if there's any longevity.

in what I'm doing. I wonder how professional traders trade. I'm buying support, uh, I'm selling resistance, I'm using fib, you know, Fibonacci levels. There's nothing massively complex about what I'm doing, basic price action at the time. And Is this how pros trade? And I wanted to know the answer to that. So I thought, well You know, let me see if I could get a job as a prop trader for a firm. So I made a kind of short list of firms and

One of the ones that appealed to me most was FueTex because they would let you trade outright. Because a lot of the firms at the time that I found they wanted you to s they wanted you to trade spreads. So I went along to Futex to sit their assessment.

And uh after sitting the res the assessments I got a rejection letter. And I think that was most likely for my math ability because we had to sit a math test and my math is pretty poor. I mean, I got a C for GCSC but it's pretty Uh so um I failed that assessment and when I got that letter through um saying, you know, okay, we're really sorry but we're not gonna take reading between the lines, you're not good enough. You're not of the calibre. that we

That then fired me up. And again I thought, well, okay, I'll tell you what I'm gonna do now. I am gonna trade even harder and I'm gonna build a record and then we'll see if I can get And I wrote back to them um not long after I'd I had had such a good such And I wrote back to them and and I said, you know what? Okay, you did reject me, um, but I've got a record here. Would you like would you be interested in having a look at it?

And I'll never forget the answer I got, which was simply you've got heart. And He said, okay, fine. The guy that responded said, okay, fine. Look, come for an interview, bring your record. I took it, they had a look through it, they went through it with a fine-tooth comb, asked me a lot of questions about why I traded this, why I traded that, and they ended up backing me.

And um it was it was a great time for me because I was able to watch the professionals, um, how they traded, um, what they did. And I work with some incredible traders. I mean, I don't know if you if you know this, but I I sat for a while with Nav, who's the you know, the um the trader that's now being hounded by the FBI.

you know made the 40 million dollars but has been accused of bringing down the US stock market but i worked I worked alongside him I worked alongside some incredible traders and I learned so much about the game And that was really where my education kind of went to the next level. But I tell you something, Aaron, which was very, very important um about this stage in my journey, which was that at this point You know, a lot of t a lot of times when you're trying to learn to trade How do you know?

That anyone that you listen to is profitable. You don't, do you? If you go on Twitter or if you go on forums, people say, Oh, this is my strategy, this is how I trade, but you don't know whether that guy is making any money. You don't know. So if you start trading and the strategy doesn't work very well initially, um, or you can't implement it effectively initially, you start to have these doubts.

creeping in. Is this guy that's teaching me this even really profitable? And it plays with your mind. The thing is about being improp is you were sitting next to God. and you could see people making money day in, day out, but you could also see people making insane amounts of money. And that really told you categorically, black and white evidence every day, this is possible. And and you know, the power of that is is is pretty astounding.

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Now, while you were in prop, what were some of the greatest lessons or the trading principles that were really drilled into you from trading within that firm? I think I mean I learned so much that it's hard to kind of drill it down to um to any one thing. But For me, one of the I suppose one of the greatest lessons that I had was just um the ability to

understand that the market could be beaten and to focus because all of these people that were making these huge this you know this huge amount of money they were so focused in what they did and they knew their markets. They knew their markets so well. And I kind of realised at that time Just how much you had to put into the game to to get to that level. Um so you know how in-depth you had to know your market from a fundamental perspective, from a technical perspective.

And you know, it was I I think that was just really it was that kind of it it was understanding how seriously these guys approached the market that that I think was one of my one of my biggest lessons. But you know, like I say, it's hard for me to to to give you specific examples because I took so much from so many different angles. Um

Another thing was was composure under pressure. You know, watching guys have big down days and not seeing it rattle their confidence at all. You know, seeing them be able to walk up the office Head held high with a big smile on their face, and you knew for a fact that the guy was down a massive amount on the day. Like we're talking tens of thousands of pounds. And and again, it it it kind of it drilled into you that right mindset.

that you didn't you didn't have a pro trader ha you know get his ass hand on a day and then turn up the next day and go, Oh, I I'm fucking scared. I'm scared to click the mouse. I I you know I don't know what to do. And it and it it just it it made you stronger, if i if that makes sense. It it

It kind of made a man of you, I guess, if if that's the the the right way of describing it. One thing that I learned that that that really stood out and really made a big difference for me personally is understanding the support uh or understanding the There's no such thing as a free trade, right? So um A lot of people move to break even very, very quickly, and they say that they, you know, they've got a free trade. And I was taught, you know, not to think like that.

Um and I have a big, big problem with

nowadays. So um because I found that I would keep moving to break even in the early days because it is you know it is comforting to to to know that your you know your risk is eradicated on the trade but i just simply found that it didn't work because the market would keep coming back knocking me out and then going in the direction that I'd anticipated And at one point, one of the guys there that was a huge trader had kind of taken me under his wing, and we actually spoke about.

And I said, you know, I just got stopped out at break even again and that that damn market has moved, you know, right where I thought it would. And he said to me, Why are you moving to break even? And I said, look, I bought this, you know, this level and it, you know, it moved up, I can't remember now, but let's say it moved up twenty ticks and it's come back. You know, I don't want to take a loser on it at that point. And he said to me, look.

If you buy support, right, which is why you got in that trade. and it goes up 20 ticks and it comes back to the support level. What are you doing? You're s you're scratching the trade. You're puking it right into support. What? Because you don't want to lose money? That doesn't make any sense. Like you're literally trading your PL. Um, you're focused on the PL. And he said to me, trade the fucking market. You know, don't trade your PL.

And it was a really, really powerful lesson for me. And again, it's kind of aligned with that. That whole, you know, that principle of when people get in trades and they get up a huge amount of money and they move to break even just so they can't lose. I've seen people that maybe are going for a hundred tick target and they're up. 90 ticks and they say right I'm moving the break even now, free trade, nothing to worry about.

And I'm thinking, nothing to worry about? How about you worry about the fact that you're risking 90 ticks to make 10? Like that's pretty worrying. Um people make a huge mistake of not realizing that risk reward evolves.

during the trade. It's not a static concept that you have a a ri uh you know a trade outset. So you can start a trade with, you know, going for a three to one risk reward, but there'll be points in the trade where, you know, that will might have massively diminished and the odds, you know, now against you. So this was again something that I took. from a very, you know, very large trader just basically not to trade my PL by constantly, you know,

uh hunting for the you know for the free trade and you know and to and to remember that that risk reward evolves and it was a very, very powerful lesson and I I I don't think I'd be where I am now without you know without having had that lesson, Aaron. That's awesome. That's really cool.

Um so let's keep this moving and let's dig in now to a little bit about um your trading style and your approach. So tell us what are you looking for and how do you identify opportunities? Okay, so um On any given day, I have certain things that I look at. So I look at, for example, basic support and resistance levels in the market, like on the higher time frames, like weekly and daily. I also look at them on 60-minute charts.

And I look at the basic structure of the market. So where are, for example, major trend lines, where are the major Fibonacci retracement? And what I try to do is I try to um map the market and essentially what I'm doing is I'm trying to play the market from one level to the next as it were. Um but The big thing with me, what I think about a lot of the time when I'm trading is where does the market have to go?

to facilitate trade because that is all that the market is there to do. So I try to think, where's this market gotta go? Where's it got to test to try and advertise for a larger amount of buyers and sellers than normal? And I find um that a lot of the time the best trades often really kind of fall in the face of what you would expect so for example um I like to see a resistance being hit multiple times and then I like to see price change

Stopping and just going quiet and just trading very quietly just underneath that resistance level. Now when I see that, I know that that's often a really good opportunity to try and buy. But a lot of traders will look at that and they'll say a resistance level hit multiple times, that must mean the resistance is really strong. And now price is just stopping just underneath it.

That means that you know the the the market is running out of steam, uh there's no momentum up here, and we're about to roll over and go to the downside. And so they get short. In actual fact, in that kind of situation, the market is often not very likely. to probe above that resistance area to try and take stops. It will try and get traders up there um to initiate and buy the breakout and it will try and get the shorts to pew.

So it will try and probe that area. Um note that I say probe, not breakout. Okay? Because a lot of people, even if they do get the idea right that we're that we're likely to trade up through that area, they get shafted expecting a two hundred tick move. So they buy it as it goes through and they get caught. So what I like to try and do is a lot of time try and anticipate that the market is gonna break out of a range and and oftentimes I will take a position in a range.

And it's weird because I found that to be highly effective over the years, but it again it flies in the face of what a lot of people are taught because a lot of people will say, Well, you know, you don't buy in a range. You wait for price to confirm. But but oftentimes once it confirms it's too late. So that's just a g kind of that's one of the things I look at. Um I'm I'm very keen on

finding trapped traders, traders that get caught. Um and you often see this at at kind of uh key reference points on the charts like major swing highs or swing lows. Um And I like to try and take advantage of them. In fact, one of my actual favourite uh setups is when you get a large gap on the open. That's why I'm always watching the the Sunday night open, particularly in forex.

Is when you get a large gap and the price travels in the direction of the gap. So for example, if we gap up and the market starts then exploding to the upside. And then we get an auction failure beyond the big reference point. So for example, it it pushes up, we get a big uh key swing high, the market breaks that swing high, but can't close above.

And so we we've got failure up there. And when I see that, particularly with an open gap, um I will usually look to fade that uh that market momentum back towards a gap. And it's just one of the setups that I see a lot of which has a you know which has a very high expectancy. Um but the thing is the market. It's inherently curious. That's something that you have to understand as a trader. The market is just very, very curious.

And a lot of the time um it needs the comfort of knowing what is beyond certain areas before it can move with confidence. in in in another direction. So for example, a lot of people say uh they'll notice that the market will break a support level. before it can rally, right? It needs to break the support level to know is there any sellers down there? Is there anyone doing business on the short side? If there's not, great, we can move to the upside now with confidence. Um

But the market, you know, the a lot of the time the market n it it likes to probe these areas, it likes to see what's going on before it can move. And that's what um that's what I'm looking for when I trade. I'm looking to see what is going on at these areas. Um are people getting caught? Um getting caught short, getting caught long, and and and what is the what is the market? doing um based on what everybody thinks it should do. So to give you an example of this, sometimes

you get um you get sentiment, right? You get very strong sentiment on a market. So let's say for example, uh well, i there's a good example the other day in the Bund, right? Now the Bund had broken on a daily chart, it had broken a key swing low on the daily timeframe and it closed below it and it was a very wide-ranging down day. Now I have my ear to the ground. Uh I'm I'm listening to other traders. I I use Twitter a lot for this.

And I'm I'm listening to what the professional traders are saying. Um and again going back to prop, what are the prop traders, the guys that I've worked with that I know uh make a lot of money, what are they thinking about this market? And I would see that, you know, the vast majority of them are bearish. Right now that gives me information that the professionals, the guys trading size, think this market is gonna go down.

So now what I'm really interested in is what the market does. And then on that particular day, you'd see that the market just could not break lower. It just couldn't go. And that was a really interesting sign, and you get armed with a lot of information there because if people are if the chart is technically very bearing.

And the sentiment is very bearish, but the market won't break. You need to be long. You need to be looking for a long. And you know, if you're not long, well, okay, fine, but God forbid you're short that. So um I try and take on a lot of information uh from from different angles to try and make a decision. But in short, could to kind of summarize, I'm looking to find out, I guess. where um where traders' pain thresholds are and

try and really capitalise on them, which is not a very nice thing to say, but if you can take advantage of a trapped trader, you can you know, there's there's money to be made there. And people, you know, people get caught on a daily basis. And it's It's not too hard to tell once you've studied the market what the signs are when they're likely to be caught. Yeah, well I mean that's just the reality of trading, isn't it? That's just how the market operates. So

Now, from what I understand, you know the setups you want to trade, right? But you don't necessarily trade them in a systematic kind of fashion. So besides your own criteria that defines the setup, what else do you need to see before taking a position? I think it's probably that qualitative um aspect coming into play. Can you elaborate on that a little bit?

Yeah, I mean I am a I'm a discretionary trader, so I don't you're right, I don't trade certain setups systematically because what I'm trying to look for is I'm trying to look for um I'm looking for kind of or taking on information from so many different angles. And I'm trying to kind of build

um a picture of the market. So I can't really bring it down to anything as simplistic as well when I see X pattern I need to then go a go ahead and do Y. Um this was a mistake that I think a lot of A lot of people make when they first get into the game is they they see um they read about a a basic pattern, like for example, a candle.

And they read like uh okay, if you see um If you see a hammer, that's that's bullish and that means that you know that the the market is is likely to go up and and they they break it down to its lowest common denominator, which basically means right, I see hammer, I get long.

Right. And a lot of the time what you've got to do is you've got to take on the information from a lot of different angles. You know, what is the w where is what time frame is that hammer appearing on? Um maybe it's a daily. So what's happening on the weekly chart? What news have we got out? What's the sentiment like at the moment? How has this market been moving lately?

Um where is this hammer appearing in terms of the context of you know, is it is it appearing around prior support resistance, is it appearing in the middle of nowhere? Um and so on and so forth. So It's it's very difficult to be systematic because you're trying to, you know, you're trying to take on this information. Um and

uh and deal with those different variables. Hmm. Okay. Now that's a great answer. So How do you determine whether or not the trade, before you get into it, has a worthwhile risk to reward before entering? Do you have profit targets or or how do you judge that before you get into it? Right, so whenever I get into whenever I'm looking at a trade, looking to get into a trade, I have an idea um of where I'm looking to take profit and I have a you know a a firm idea of where I'm wrong on the trade.

So then what I've got to think about is is that risk reward ratio good enough to merit taking the trade? Now, um, I guess I I differ from a lot of traders in this in this respect because there are a lot of people that are um taught to always go for a two to one, or always go f you know, for a three to one or what have you. And that is good, don't get me wrong, the higher that your reward to risk ratio is, the better, for sure. And I wouldn't dispute that, but what I would say is that it

It is um dependent, your edge is dependent on your risk reward ratio combined with your strike rate. If you have a high strike rate, you don't need a high risk reward ratio to make money. So um I'm aware that I can get away because of my strike rate with a with a risk reward ratio of one to one.

I don't like going lower than one to one, although I've worked out over time that I can get away with it. Uh just going fractionally lower than a one-to-one, like a 0.9R. But generally I'll look for one to one or higher. Um now obviously I want to get as high as I can. So one of the things that I do is I try to establish very early on in the trade: is this a trade that I am going to try and run? That's really a key question.

And I think it should be a key question for all traders because a lot of traders get into the trade and they find that managing it is the hardest thing. And a lot of time managing it is hard because they don't know

They don't have an expectation of where they think it's going to go. They just they they they they get in and they think well the market is likely to react here. Maybe we're a bit overdone to the upside or the downside or this is a this is a big trend line that we've just broken out of. I think it can tank, but tank how far? You know, so you've got to have an idea and what I try to do is I try you know, I have

Two types of trades. I have those where I feel that the market is poised from a higher time frame to make a big move. And then I'm gonna get in on a lower time frame, like the 60 minute, and try and enter that trade and run it. sometimes for the whole day, sometimes even for longer, to try and capitalise on a bigger move. But the other type of trade is is where I will literally play from one level to the next intraday. So it might hit a support and trade up to the next level.

Um and I you know, as you would expect, I'll find that the trades where I will run onto a higher time frame will be the ones that pay out in terms of giving me a higher uh risk reward ratio. But I don't um I always I trade the market, right? I don't trade risk reward. So what I mean by that is sometimes I see people uh they they come into the they come into the market and they say, okay, so I'm planning on taking this trade. And

I'm buying, let's say, this support level and I think it's going to go up to the next level. And they look at that trade and they say, well, hmm, but that's only got that's only got a one to one risk reward. I've really been told I should get a two to one. So I'll tell you what I'm gonna do. I'm still gonna take that trade, but I'm gonna make my stop tighter. Or I'm still gonna take that trade, but I'm gonna make my target bigger.

And you see what they're doing there is they're completely ignoring the structure of the market. They're trying to impose their risk reward on the market. And to me that's crazy because you've got to trade the market. You know, the market doesn't give two shits about your risk reward ratio. So, you know, if you're not trading the market, what are you trading? And I think again, that's where a lot of people a lot of people go wrong.

Mm. I really like that point. I'm glad you brought that up about um sort of trading the actual market and not trying to imply your your views onto the market and try to make them fit. So no, I really appreciate you you bringing that up. That's excellent.

Um now I'd just like to to keep moving. So now that we've covered your your strategy, your approach to trading, let's get into some more general advice for other traders. Now One of the things I've heard you speak about in the past, which I found quite interesting, was again going back to how you used to work um or trade within a prop firm. You said that everyone who came in was given access to the same technology, the same equipment, same coaching, learning, all of that.

Yet still only a small amount would become profitable. So I guess two questions to come from that. Why is trading so damn hard? And Were there any obvious differences between the the few who made it and the majority who didn't catch on? I think it's a good thing.

That's a such a good question and it's it's difficult to answer, it really is. Um it's like the million dollar question, why do some people make it and others don't? Um and it's it's the question that everybody wants answered. Um you know A lot of people Make the mistake of thinking that just because anyone can open an account and they can buy and sell, that anyone can be a trader.

And this could not be further from the truth. Like this game requires a specific skill set. You've got to be wired a certain way to be able to make money. That's just a fact. You have to be able to act with ruthless, decisive And commit to a position But then in the next breath be able to completely change your mind if necessary.

You gotta be able to cope with insane pressure to be able to get knocked down and get back up to stay strong, to stay resilient, to stay focused for long periods of time. And you know, some people simply are not built this way. Um Now, a lot of people will will come right back at you then and say, Well, but can you learn? And that's really hard because sometimes to learn them you have to change your entire personality.

And I guess you know some traits are easier to learn than others if you're determined enough. But if you are determined enough is the key phrase. I mean l let's for example take patience, the the patience to wait for a you know, a a good trade. Um A lot of people just, you know, they they just don't have this patience. Um I've I personally have got the patience of a saint. I mean I can stalk a trade for days and weeks if I have.

But ironically, I don't have a lot of patience with people that come to me and say, Oh, I can't find the patience to wait for a good setup. You know. Patience is a basic and essential skill that you need. And the way I see it, you know, if you can't find it, get another job, people often turn to a trading psychology.

Right? Well to find patience. Seriously? Um, you know, it's it's like Nike said, you know, just do it man. Um here's another one, right? You you get someone that the they take a couple of trades and they lose money and now they're scared to take the third.

And they're reading all these like, you know, these books on psychology. I mean, can you imagine for a second? Imagine getting a job as a salesman, right? And they give you some leads to call, and the first call you make, someone just slams the phone down. And the second one you call, the guy just tells you to fuck off straight away.

So the third call comes along and you say to your boss, Oh, you know, I'm a little bit scared to call the third guy on the list. I mean, what do you think the guy's gonna do? He's what do you think your boss is gonna do? He's gonna hand you a self-help book or he's gonna show you the door? You know, at the end of the day, um there are certain skills, certain character traits that that

Are hard to come by, but something like patience, you know, you've you've just got to have it. You need to take a look at yourself, in my opinion, and think this is a skill that I have got to have. And I've just, you know, I've got to I've got to just get it. Um, I've got to sit down and I've got to make sure I I have it, or I've got absolutely no chance. Um When it comes to even being, you know, uh being nervous to take the third trade after two losers, look, you know

How are you gonna deal with this? You should trade live, trade Small as you can, but I I don't agree with trade. for me personally, I don't believe it teaches you the right psychology, but trade live, trade small, build a record and and get some stats together so that you, you know, when you go into drawdown, you, you know, you look at your stats and you know in the long term you're profitable. Because you know.

Everybody gets drawdown. Everybody gets drawed down. This is a guessing game, right? And you're you know you're a gambler at the end of the day as a trader and you're gonna have losing. Everyone, every professional trader will have a losing streak. Um, the only people that don't have losing streaks are Twitter traders. So, you know, um ultimately I I guess The the point I'm trying to make is that a lot of these guys that I work

with right. They were they were wired up in the right way and they didn't need a psychology book. They you know when when when they didn't when they thought, okay, I haven't had a lot of patience on the last trade. They just sat down and they thought, I need patience and That's what I'm gonna have. And they learn, you know, to have these skills and and very, very quickly. Even if they maybe didn't have them when they came into the firm, they got them real quick.

Uh the longer that it takes you to acquire a skill, the more likely you are to drop out of the game before you eventually get where you want to be. Some people, you know, often often ask me how is it that I still kept going after seven years'cause I didn't get profitable until two thousand and seven, but placed my first trade in

How did I have the strength to keep going? Um, why did it take me so long? And and as I think I said at the beginning, the reason it took me so long is because I was a v you know, a a very, very slow learner. Um, I mean I I traded these stocks for four years when there was absolutely no edge. You know, i i uh a l a baby could have told you there was no edge in doing that. You're still doing it for four years. It's like banging your head against a brick wall every day.

and and and expecting, you know, that it's it's not gonna hurt. Um so I I think that, you know, if it takes you a long time then uh This is this is a real danger and for some people it really you know, it takes them a long time to learn, they just drop out the game. So if you can learn from your mistakes quickly, you're more likely to make it. And I think these these guys that I worked with that that that got so big, they were able to just learn from mistakes.

Rwy, Rwy, Rwy, Rwy, Rwy, Rwy, Rwy, Rwy, Rwy, Rwy, Rwy.

Mm. Yeah. You hit on a ton of great points and that. That's an awesome answer. And something you did hit on there was um sort of losing streaks and going into um uh going into a drawdown. So I mean as a day trader or as any trader as a matter of fact, I'd imagine you have days when you're not on your game and you have it um and you have some kind of losing streak. How do you effectively manage these times?

Well, you know, that's a that's again a a great question. And you just have to keep your chin up and you just have to plow through it. I mean, that's the that's the only thing that I can say. You just have to you know you have to keep going. Um If it gets, you know, i I mean when I say keep going, I mean if you have a you know a down day or two, you you you've gotta have the ability to come in on on on on day number two or day number three and and be

strong as if nothing's happened. But if you do get from time to time streaks that last a week, a fortnight, um, you may find that it impacts you more and you know, you may you may need to do different things. I mean something that that I will do from time to time if I if I do hit a bad run is take some time off. Um they say time heals all wounds and it and it and it's completely true. Like, you know, at the end of the day, if you can just take

even sometimes two or three days away from the market, it really can clear your head. But I think the One of the things or one of the elements that I am, I guess, fortunate in is that I have an overwhelming amount of self-belief and self-confidence. And I don't know where I get that from. Like I guess I'm just wired that way, you know?

it's just it's it's something that I have which is fortunate for me in this career, but it's it takes a an enormous amount to lock to to to knock me. And I would say Honestly, since I got profitable in two thousand and seven and you know it's now eight years on, I would say I've probably only had one period in that whole time uh where It was where it was really hard. Like looking back on it it was really hard and I thought, you know what?

I don't know how I'm gonna keep doing this every day because it was just, you know, I was going through um a streak, uh a negative streak that lasted for weeks. and I just couldn't make money. Like literally everything that I did turned to shit. And that was really, really hard. But Again, um you know you just You just plow through it. I mean I I I I I don't think that what I'm saying is particularly helpful.

to people because they'll probably be thinking, Well well how do you plow through it? you know, what's the what's the magic pathway? There isn't a magic pathway, you know.

I if I if I come in and and I lose money every day this week coming, I know that I'm gonna come in the week after strong. I just know it. Because it it just it doesn't phase me anymore, Aaron. And I don't think Like I say, I don't think that's really gonna help your listeners, but I think I suppose it's one of my strengths that's hard to you know to pass on because I don't know what makes me.

Hmm. Now that's excellent. Now you have a quote which um I really I really like it. I think it's an awesome quote and it goes if you're not working on your edge, someone else is. So now I'd love it if you could expand on this for everyone listening and speak to the competitiveness of trading. Right, that you know, you should know that there are guys working so hard, so hard on their edge. And

It's often the guys that are huge that are working the hardest, right? Which is why they're huge. Um You often hear people saying that they want to get into this game. So they can make loads of money and they can retire and, you know, sit on a beach sipping pina coladas and, you know, placing a few trades from their laptop. The fact of the matter is, is that these guys I worked with

That have made enough money if they wanted to live that kind of lifestyle, do not. They are the first in the office every morning and they are the last one to leave. And the reason that they've done so well is because of the amount of hours that they've put in and

They are the guys that are essentially taking your money. These are these are the people that have done the work that most people are not prepared to do. And at the end of the day, you're paying them, right? So I'll give you an example. Um when I was improv. Uh and I and I often tell this story. There was um there was a couple of really big, big guys there. Uh we're talking like a couple of hundred grand a week that they would be making. And they were huge and

One day the one of the guys had had a stellar day. I don't know how much money he'd made, but we we are talking a sh a lot of money. And everybody was kind of, you know, had had heard about it and there was a bit of a buzz. And he was just, you know, he was he was just cool. He was just, you know, staying, you know. uh emotionally uh cool, but you know, had a had a smile on his face and was chatting with some of the guys.

And anyway, um I left the office at about, I don't know, five o'clock and I got a train home, I got right to my front door and I realised that I'd left my key. in the office to to my front door. So I thought I'm not gonna call a locksmith. I'm gonna have to go all the way back into central London to the office, get my key. So I get all the way back to the office. By the time I get there, right, it's about half past

I reckon it's probably half past nine. Like the market is closed at this time. Took me ages to get back. And the market is closed now. I come into the office, right? And All the lights in the office are out. There's just a little light on at the back of the office. Low, and so I'm like, okay, there's some somebody's here, but all the markets are closed. Lo and behold, there is one guy left in the office, and it is that guy that had had that.

Huge return and he is sitting there um recording his trades for the day and he's writing down you know what went well, what went badly and making a plan for the next day. And that to me was just it was a real eye opener because, you know, again, most people are thinking to themselves if you know, they they wanna make money in this game to live the easy life.

And yet the reality of it is that most of these guys that have got all this money are working so hard. A lot of them don't have balance in their lives. Um, that's just the way it is. So when I say somebody is, you know, if you're not working on your edge, somebody else is, I mean that, you know, these are the kind of hours that people are putting in. They are taking this game seriously. They know their statistics.

Um, they know their edge inside out and and back to front. I mean I personally spend a lot of time uh number crunching. So I I I crunch a lot of things to, you know, when when I see patterns in the market. I look at the the probabilities of certain things happening and sometimes Um I see guys cool trades out, for example on Twitter.

And I think to myself, and I don't I honestly don't I don't want to come across in a kind of smug, know-it-all way, because trust me, I get it wrong, massively wrong, from time to time. But sometimes I see people call these trades and I think to myself, you know what? If you'd have done your homework, you would never be taking this trade because there's no

You know, there's there's very, very little probability that you are gonna see that um, you know, see that make money. For example, I might see them um, I don't know, trading a pattern that I know has a very, very low strike. Um and and again, you know, it's not to say that that I'm always right, but this is what I mean when I say that people have done this work.

And a lot of the time they're the guys that you know, the the newer traders are, you know, are making ill informed decisions and and ending up paying the bigger guys that have done the work and and put that time and effort in.

Yeah, so you you touched on it there and the the guy who made the the huge wins for the day, he was still at the office late, you know, he was the last one to leave. Do you yourself have a daily routine for preparation and reflection outside of market hours? And if so I mean what's the importance of keeping a trading journal and and is it important like what's important to record? What should people be writing in their trading journals as a minimum?

Well the first thing I would say is that it's vital to have a you know to have a trading journal. Um most people don't and You know, even if they do, they maybe just log the trades, but they don't really examine them with the aim of increasing performance. You really have to look at your journal hard. and you know f and and really try and answer three questions, right? Number one, how can I make more money from my winners? Number two, how can I lose less money from my losers?

And number three, how can I get more trade ideas? Okay. Now, in terms of journal, I would like to plug a company called Edgewonk. And I came across Edgewonk recently. And I think that they are doing incredible things in the field of of of journaling. I wish that that had been around when I started out. You know, I would have probably got profitable a hell of a lot quicker. Um

But, you know, th they're they're doing great things out there. But ultimately, there are so many traders out there that just do the same thing day in, day out. And They keep expecting a different return, but they're not getting anywhere. Now, I'll give you an example. I worked with a guy a while back.

And he was really going nowhere, but he'd never taken a proper proper look at himself and his record and where he was going wrong. He would just say to me, Oh Tom, I think the problem is I'm making money, I'm giving it back, making it, giving it back, I'm treading water. I just don't think there's anything really in my strategy. I think I need to learn a different strategy.

And so I said, Well hold on, let's have a look at actually what you're what you're doing. Can I have a look at your trade journal? And he'd actually got a trade journal. So, you know, kudos to him for having a trade journal. He had it and he sent it over. Now the first thing I notice was that this guy's traded size was totally inconsistent. Like one day he's doing a four lot with an eight tick stop. The next day he's doing a one lot with a ten tick stop. It made absolutely no sense.

So I asked him what was up with that. I said why are you varying your size so much? And he said, Well, two reasons. Um I'm varying it based on um my degree of confidence in the setups. If I see a setup I really like, I put more sides. Rydyn ni'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd.

So I thought, hmm, okay, this is this is not good. Um but I said okay, let's start with the setup. What makes you risk a five lot on setup A, but only a one lot on setup B to quantify that for me. And he says, right, setup A is more likely to win. So I said, right, but okay, but based on what? What's the expectancy of it? So I'm expecting him to give me a strike rate, an average win versus average loss, you know, some stats. And he says, no, no, no, just gut feel.

So I'm thinking right, so basically, you know, when you've just got a good gut feeling, you're risking more. Okay, that is that for a start is is clearly not working for you. We can see that from your performance. Um, but then the next bit is even more problematic because It turns out that like many people, he'll do a two-lot, right? He'll do a two-lot trade. And if that two lot trade loses money, the next trade he'll do a four lot to try and make the money back quick.

Now if that loops He completely shits himself and the next trade is on a one lot. And so many people do this. So they'll get, you know, um a loser and that loser, they they try and revenge trade it and because they're not in the right emotional mindset, they've upped their size and they then get really hit hard.

And then rather than just take a break and come in, um r and and and and refocused, they then get so nervous that they they go right back to tiny size and then of course sod's law they immediately get a winner um and but you know it's on such a small size it's had no impact really for them. And anyway, lo and behold, what I found out is over a decent sample size of trades, this guy had a really positive expectancy, but the guy's down money.

And this thing happens to a lot of people on a much bigger scale. He had no idea that he had a winning strategy. All he thought is, I'm not making anything, the strategy doesn't work. And he hadn't realized it was due to varying his size. But when you crunch the numbers, It tells you that if he took every single trade on a one lot or every single trade on a five lot, he would have made money and he would have made a lot of money. Um but again, i people don't look at this. Um something else.

And I won't get you know I won't go too into this now but but something else is always worthwhile looking at is your maximum adverse excursion. So how far do your winning trades go against? Um, let's assume for a second that you've got uh a fixed strategy where you have a fifty tick stop on every single trade and you have, I don't know, a fifty tick target. So you're going for a one R.

And let's you know let's just assume that you win a hundred percent of your trades. You win every trade. I know that's never gonna happen, but let's just assume it. Um now you could look at your stats and if you find out that the furthest price went against you in your sample size was six ticks.

let's say, then guess what? You've realized your stop is way too wide. You're using a 50 tick stop, but you, you know, the furthest price ever went against you is six ticks. You could massively reduce your stop and you know your your expectancy would go through the route.

But there's a lot of people out there that are just busy, you know, patting themselves on the back going, Look, I've won a hundred percent of my trades, you know, I'm absolutely killing it but they're not working on moving forward. And This is something that you know you you should never forget is that you can always, always improve. There is nobody out there.

that can't improve in this game and that can't do something better. So for me, a journal is just is a very important thing because I come to it usually every quarter, I review my journal and like I say, I'm trying to answer one of those questions. And try and find a better way um to to do things and once you've found a better way to do things, you know, you've you've you've got to implement that. Um but yeah, I do think it's all about

ultimately having a journal and and recording the right things and studying it. And if you wanna know what to record, the the the best way to do it is is in my opinion to at least go on YouTube and have a look at Edgewonk's videos because they really You know, they really go to town on it, it's like their thing, it's what they know.

Yeah, that sounds really cool. I'm gonna check that out myself and I'll also put a link to it in the show notes as well. So yeah, I mean if if you recommend it I encourage that other people check it out also. Um Now, I want to dig into just a couple of the things that I spotted on your Twitter feed. Um and the first one would be uh the the video you recently made. It's a parody video um on so called trading gurus, which has been

Getting a little bit of attention and I mean I thought it was quite entertaining. I got a good laugh from watching it. What was your reason for doing this? I mean, I presume you feel some kind of way about those who present themselves a as gurus and Maybe not qualified to do. You know, I you know the thing is Aaron, I make a lot of jokes, right? And and everybody knows that and I feel that sometimes it's the only thing that kind of keeps the stress at bay because it is quite a stressful job.

And you need to have the ability to look at the market and just laugh, you know, from time to time. Sometimes there are there are just the most ridiculous moves and, you know, if you don't laugh, you're gonna end up crying, you know, with your head in your hands. So I think it helps to have a sense of humour but Regarding that that video that specific video There are so many people that just talk shit in this industry and I can't help but want to parody it sometimes. Um

You know, for example, those that that spout cliches like try and not to think about the money. Right. Now that's actually very good advice. But they'll be saying try not to think about the money and then their Instagram page is full of Ferraris and Lamborghinis and I'm staying at the Hilton and I'm drinking Kristal, it's total nonsense.

And aspiring to that lifestyle is what kills people in the end. Um the other thing that I tried to kind of parody in that video is just ridiculous hindsight analysis that a lot of people sort of post. Um And that really is a good idea. That really gets to me. So my personal favourite is is is when people

just kind of say, Well, this is where you should have been long, or this is where you should have been short. And you're thinking, Well, yeah, no shit. It's been a massive move. Yeah, I I you know, I wish I had been. But um you you do see that and and of course something else you see a lot is when people they say like all right there's a big trend line here now

The market could rally from this trend line, but also the trend line could break, and if it breaks, the market could go down, but it could also force break and then rally, so watch out for that too. And basically like

Every single contingency is covered, but they're not telling you anything. Like the person watching literally doesn't know whether they need a shit or a haircut. Like they they just don't know what to do with that information. So I kind of like I just wanted to make a joke I suppose out of

you know, people that that make all these videos and they're selling you the dream but at the same time they're not telling you anything useful at all. Um The funny thing is, Aaron, it kinda backfired on me because I think a few people actually did take it seriously.

So like I saw like a few people on forums were kind of saying, Oh, you know, Trader Dante's really gone downhill now, you know, look at this analysis on cable, it's completely useless and I'm thinking, shit, you know, you guys haven't realized that's a parody? But I mean I thought it was pretty obvious from watching it, but I mean um people don't catch on to that.

On a more serious note, what you said uh the other day in one of your tweets is you said, if you think the cost of this game is merely in the amount of money it takes to learn it, you're seriously deluded.

So what is the real cost to succeed and what was your what's your thoughts behind that? Well now now you set up with that question, you know we can't we definitely can't end w with that question because the answer's so depressing. But um you know, the cost of learning the game is is not just in the money because uh a toll that I think that the that the market takes on a trader. There is a huge amount of stress that a trader goes.

And along with that stress, you usually experience um a whole host of emotions, you know, fear, frustration, anger, depression. Uh a lot of people focus so hard that they get burnt out after a while. Um There is an impact on your health. I honestly do believe that. And also on your relationships as well. I mean, you know, it's it's it's difficult. Um, I find it difficult myself, and I'm a profitable trader, to sit in a study. for ten hours a day.

and sometimes just get literally my ass handed to me by you know by the market and then, you know, come out and and and see, you know, my girlfriend and her daughter and just act like everything's perfect and, you know, oh hi, how's it going? You know, and and and and that really happens. You know, it i i i it it it has a toll and it especially has a toll in the beginning when you're when you're not used to this because trading is a really cruel and really emotionally draining experience. And

I understand I won't talk anyone out of trying it by telling them this. No one's gonna go, Oh, I heard you can make millions trading forex, but uh this chap traded ante on the internet says it's stressful, so I don't think I'll give it a go. I know I'm not gonna talk anyone out of it, but I try to prepare people ymwneud â'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau'r sylwadau

Because I think, you know, as I say, people just sort of think that the cost of trading is limited to how much they paid for a course or a book or how much they lost trying to learn it. Um and I you know, I I I do think that many do pay um uh a different cost if only if only in time as well um you do find that the a lot of the biggest and best traders will

We'll confirm that and w and will say there is a cost. It is negative, it is depressing, but you know, I honestly do believe it to be the truth, Aaron.

Yeah, I think that's really good. And I mean, Tom, we are gonna end on that note because I mean I think it's good that people you know, I mean, most of the listeners appreciate that and they they want the truth, you know, they they can accept that, so Um I mean we've been we've hit on just over an hour now, so we should probably start to wind this down.

Okay. Um I mean that was a brilliant answer and I mean your your answers throughout this interview have been on point, really, really good. So thank you very much for doing this. I really appreciate it and I'm sure the listeners are going to also.

Fantastic, fantastic. Well I've really enjoyed um I've really enjoyed speaking with you, Aaron. It's been great. So Thank you very much. Well yeah before you go, do you want to share with listeners where they can go to find out more about you and connect with you? Sure, I mean if I've got a a website which is www dot trader.com d A N T E. Dante is my middle name, by the way.

Um, so that's that's why the trader dante. Someone once accused me of making it up because they said it sounded mysterious. No, it i it is actually on my passport. Um and but I mean I'm I think that most people you know know me via Twitter. So uh on on Twitter I'm at trader uh underscore dante. Okay. And uh yeah, I I post quite a lot of stuff during the day, so uh you know, I always uh always appreciate uh appreciate the follow.

Awesome. Well, I mean I encourage everyone to to make their way over to Twitter and uh follow along because I mean you do post a lot of great stuff on Twitter, so I mean a lot of value in just following along. So again, Tom, thank you very much for doing this. Take care and let's talk soon. Cool. Thanks a lot, Aaron. Take care.

Okay, and that brings us to the end of another episode. So thank you very much for tuning in, and I'm sure you'll agree with me that Tom was a standout guest, just a whole ton of raw insight that he was able to share with us. So I really appreciate Tom coming on and having done this and I'm glad you've now had the opportunity to to listen to it and absorb some of that as well.

Now I'd just like to give a friendly reminder about the coaching service that is now available at chatwithraders.com forward slash coaching. So just to refresh your memory, this is one-on-one coaching. Uh so it's just you and a professional trader speaking about your trading and how you're gonna move forward from here. So

There is currently three trading coaches on the team. They're readily available and they're prepared to block out their time and they have one focus, which is just to help you improve and achieve better results as a trader. These are three genuine traders, so the There's uh Chris Says, who is a guest on the podcast for episode thirty three. He's a swing trader.

We've got Zach Hurwitz who is on episode 11 and episode 25. He's a day trader with a great emphasis on VWAP, both equities and options, very knowledgeable on both. And thirdly, we've also got Brad Jelenik, who was a guest on episode twenty-six of the Chat With Traders podcast. He's a prop trader from Chicago, uh, with a great focus on intraday moves within global futures markets. So he's a futures guy through and through, very knowledgeable. He's been trading since around

Uh two thousand and three. So a lot of experience there. So if you guys want to find out more about this coaching service, just go to chatwithtraders.com forward slash coaching and I mean one on one coaching is really where it's at. I mean, if you listen to You know, a number of the interviews, you'll notice there's a common theme that many of the pro traders who have gone on to reach you know high levels of success.

have done so with the guidance of someone who's played the role of a trading coach, a trading mentor, uh in their life. So it really, really helps uh your results and I'm sure, you know, I I really do hope that Some of you guys get some true value from from doing these sessions. So chatwithraders.com forward slash coaching. Go there, check it out, plenty more info. Again, if you have any questions about it, just shoot me an email. My email address is Aaron at chatwithraders.com and I can answer

Any questions you have, anything you're unsure about, just let me know. All right guys, have an awesome week and let's talk very soon. You've come to the end of this episode of Chat with Traders, but don't worry, more great episodes are on the way. Leave us a rating and review. On chat with the