AI Summary
This video provides a comprehensive guide to creating a profitable trading strategy in 40 minutes. It covers the definition of a trading strategy, the importance of patterns and rules, different trading philosophies (price action, smart money, indicators), and how to evaluate a strategy's profitability using metrics like win rate, risk-reward ratio, and frequency.
Chapters
A trading strategy is a pattern that repeats over time with specific rules that give a mathematical advantage in the long term.
The pattern is the repeating structure (e.g., impulse-pullback-continuation), while the rules define entry, exit, and management. Both together form a strategy.
Patterns are categorized as continuation patterns (trend continues) or reversal patterns (trend reverses). There are many variations within each.
The main philosophies are smart money (liquidity-based), indicators (e.g., moving averages), and price action (support/resistance, Fibonacci). All are equally valid.
Markets are fractal: patterns repeat across all timeframes. Higher timeframe determines direction; lower timeframe is used for entry.
1) Hypothesis (what you want to see), 2) Execution (how to enter), 3) Stop loss and take profit, 4) Position management.
Key metrics: frequency of trades, risk-reward ratio (gain vs. loss), and win rate. Use these to calculate expected return (e.g., 23.07% annualized).
A profitable trading strategy combines a repeatable pattern with a set of rules based on a chosen philosophy. To evaluate profitability, consider trade frequency, risk-reward ratio, and win rate, and use tools like ChatGPT to calculate expected returns.
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Tutorial Checklist
Study Flashcards (8)
What is a trading strategy?
easy
Click to reveal answer
What is a trading strategy?
A pattern that repeats over time with specific rules that give a mathematical advantage in the long term.
00:48
What are the two main categories of patterns?
easy
Click to reveal answer
What are the two main categories of patterns?
Continuation patterns and reversal patterns.
04:48
Name the three main trading philosophies mentioned.
easy
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Name the three main trading philosophies mentioned.
Smart money, indicators, and price action.
10:41
What is fractality in trading?
medium
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What is fractality in trading?
The concept that patterns repeat across all timeframes.
16:40
What are the four components of a trading strategy?
medium
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What are the four components of a trading strategy?
Hypothesis, execution, stop loss/take profit, and position management.
25:31
How do you evaluate a trading strategy's profitability?
medium
Click to reveal answer
How do you evaluate a trading strategy's profitability?
By considering trade frequency, risk-reward ratio (gain vs. loss), and win rate.
34:18
What is the role of the higher timeframe in a strategy?
hard
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What is the role of the higher timeframe in a strategy?
To determine the direction of the next two or three candles (trend).
21:47
What is an example of a hypothesis in a trading strategy?
hard
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What is an example of a hypothesis in a trading strategy?
Looking for a higher high and a pullback to Fibonacci levels to join an uptrend.
28:49
💡 Key Takeaways
Definition of a Trading Strategy
Provides a clear, foundational definition that sets the stage for the entire video.
00:48Pattern Categories
Simplifies the vast number of patterns into two fundamental types.
04:48Three Trading Philosophies
Highlights that all philosophies are equally valid, countering common marketing hype.
10:41Fractality and Timeframes
Explains how to use multiple timeframes to find direction and entry.
16:40Evaluating Profitability
Provides a practical method to quantify a strategy's expected return.
34:18Full Transcript
[00:02] step how to create a profitable trading strategy in just 40 minutes. After watching this video, you will be able to create profitable trading strategies and make money with them, as you will learn everything you need to know.
[00:17] What is a trading strategy? Parts that make up a strategy, how to create a profitable strategy, and how to know if a trading strategy is
[00:29] profitable or not. In addition, at the end of the video I will share with you a end of the video I will share with you a free, complete, step-by-step trading training course so you can learn to trade without spending any
[00:48] explaining what a profitable trading strategy is. By definition, a trading strategy is simply a pattern that repeats itself over time and to which, by applying specific rules, we obtain a winning mathematical advantage
[01:03] in the long term. And before I start defining point by point everything that represents a trading strategy, I want to make a point about the
[01:15] pattern and rules. There are many patterns, we'll see them later, but let's imagine that a person has this pattern as their concept, right? Look, impulse pattern, pullback and continuation. And this is the pattern you
[01:30] detect. This, obviously, happens a lot, constantly. What does not constantly repeat itself? For example, let your specific pattern be this. Impulse, double top, fall, corrective movement, fall, double bottom, impulse,
[01:45] dust, continuation, dust, continuation. If you're specifically looking for this, you'll find it much less than if you search for this here. Do we agree? No? Well, within the same structure, within looking for the
[01:58] same pattern in the chart, in the price, this is the pattern that repeats itself, so the fact that it repeats itself gives us many opportunities to enter.
[02:10] We can apply different types of rules, because what we have here is not a trading strategy, this is simply the pattern. You is simply the pattern. You
[02:24] makes one trading strategy different from another. For example, someone might say within this same pattern, "Okay, what I'm going to do is wait for a file value gap to form in this intermediate zone
[02:38] . I'll enter with a limit order, place a tight stop loss, and a take profit at the top. Perfect." This is a set of rules. Now, this is simply a pattern with rules, but it doesn't mean it's a
[02:53] better trading strategy than, for example, waiting within the same pattern for the price to reach a moving average, and then, when it reaches buying as the price starts to move, placing a stop loss—I'm making this up—
[03:07] at the beginning of the impulse, and a take profit in this zone here. I'm making this up completely. This is one type of rule and strategy, and this is another type of rule and strategy. The important point is to
[03:22] understand that the strategy is not formed by the rules, nor is it formed by the pattern. The trading strategy, whether profitable or not, is not the pattern itself. In this case, we're going to talk about how to create trading strategies. Profitable. It's created by the set
[03:37] of elements, the pattern that must be repeatable over time, and that set of rules. When you combine the two, you have a trading strategy that gives you a long-term mathematical advantage, which
[03:51] means that there will be times you win and times you lose. You don't know if you're going to win or lose during the following trades, but you do know that following trades, but you do know that if you repeat the same
[04:03] structure, the same pattern, and the same rules over time, you will eventually make money. In the final part of the video, I'll show you how to tell if one trading strategy is more or less profitable than another . Note: I'm not talking about
[04:18] trading philosophies, not the set of elements we select to trade one thing or another, but the strategy itself . Once you have all the also see later in the video, I'll
[04:35] show you how to tell if one is better than another, or if the other is better than the first. But now let's start at the beginning, since within the definition of what a profitable trading strategy is, we have We've talked about two very
[04:48] we have We've talked about two very important elements: patterns and rules. Starting with patterns, among the many types of patterns that the many types of patterns that exist, we could categorize
[05:00] them into two forms: continuation patterns and reversal patterns. Going back to the tablet example, continuation patterns , as their name suggests, continue the previous movement. For example, you have a
[05:14] downward movement, a pattern forms, and a continuation occurs. These are continuation patterns. Then you have reversal patterns. You 're in a downward movement, a pattern forms, and a movement reversal occurs
[05:30] . This is a continuation, and this is a reversal. Is this the pattern as such? Are there only these types of continuation patterns and
[05:42] reversal patterns? No. Obviously, there are dozens, right? Hundreds of different ways to look for continuation patterns and hundreds of different ways to look for reversal patterns. But generally speaking,
[05:56] when you apply a strategy, you'll apply it following the fundamentals of price action, that is, following the fundamentals of how the market moves, regardless of the pattern. Whether you use
[06:13] price action tools, indicators, or matter. The market itself moves in a very clear way. It moves
[06:28] in an uptrend, a downtrend, or a range. That's it. It only moves in those three ways. Then you'll try to make money with whatever methodology you choose, but every single
[06:43] trading strategy tries to take advantage of uptrends, downtrends, or ranges. Now, within these three types of market movement , to go from an uptrend to a downtrend, or from a downtrend to an uptrend, or from an uptrend to a range,
[06:56] to a downtrend, or from a downtrend to an uptrend, or from an uptrend to a range, downtrend, or whatever, to go from point A to point B, there are two point A to point B, there are two ways: as a
[07:14] reversal pattern. one type or the other. Another one. That's all. Obviously, it's not that simple.
[07:26] As I mentioned, within continuation patterns there are dozens, right? Hundreds of ways to look for continuations, and the same goes for reversals. But first, it's very important that you understand you'll have to
[07:40] define whether you want to look for continuation patterns or reversal patterns. In general, what people usually look for are continuation patterns. We have the initial impulse, we have the pullback, and we try to
[07:54] apply analytical techniques within that pullback to join the trend, whether it's an uptrend or a downtrend. Before continuing to develop more very important concepts, I want to make a small disclaimer here: what
[08:08] the average course seller will try to do is sell you their pattern. That is, regardless of whether we have continuation and reversal patterns in general terms , there are many ways to approach that
[08:21] continuation or that reversal. Someone who doesn't care about you as a person, but simply wants to make money off you and sees you as just a number, will try to constantly condition you to
[08:37] trade their pattern. The pattern, that you trade one way or another, won't tell you the truth. The reality is that there are many different ways, all equally valid. Right now,
[08:50] one way or another is simply more fashionable because it's the one that sells the most; it's like the new opportunity. But in 3 or 5 years, there will be another way that sells the most because it's the new opportunity. These kinds of people—and I certainly do
[09:04] n't, which is why I make these kinds of videos—are trying to get you to buy into their training or their way of seeing the market because, according to them, it's the best. This way, they keep you constantly on the
[09:18] training cycle because one way ends and another becomes fashionable, and then another, and another, and another. Well, it's very important that you understand that. Everyone is going to try to force their way of seeing the
[09:32] market on you. Is one way better than the other? No. All ways of seeing the market are equally valid. Later, we'll get into how to know if two specific strategies with their Things are equally profitable; one might be
[09:45] more or less so. But generally speaking, the way you view the market, the way you study it, and the way you trade it is equally valid in one place as in another. Having already developed the pattern section, let's go
[09:59] directly to the rules section, explaining the different types of rules that exist. So, we understand that a pattern can be a continuation pattern or a reversal pattern. It doesn't matter; we simply have to
[10:12] make sure that it has a specific shape and that this shape repeats over time. Now it's time to apply the rules that will allow us to create a profitable trading strategy. Within the set of
[10:26] rules fall the different trading philosophies; that is, depending on which school of thought you align yourself with—it could be similar to philosophical thinking—you will apply one set of tools or a different set of
[10:41] tools. Regardless , it's important that you understand what I mentioned before. These sets of tools, as such, are all equally find the one you like best. Choose the one that best suits you or the one you find easiest to
[10:55] understand. We'll look at specific strategies later to see which ones are better or worse. But with that said , we can group trading rules or philosophies into three main categories: smart money, indicators, and
[11:12] price action. Let's go straight to the screen to see an example. Here we're looking at a basic structure, a continuation pattern, because we have an
[11:26] a continuation. What's the best way to apply a set of rules to trade this pattern? What's the best philosophy? Well, I could influence your view of the market and tell you, "
[11:40] Look, the best philosophy is indicators." You put a moving average and notice, the moving average is a dynamic resistance while the price is falling. And when the price starts to rise, what does the price do?
[11:54] A push, a pullback, a continuation, a pullback, a continuation. In other words, it is first a dynamic support. Moving averages are the best . It could also
[12:09] condition you in another way and tell you, look, moving averages or indicators are outdated elements. To calculate a moving average, you have to wait for the price to close, which will give you
[12:22] late entry and exit signals. Liquidity is the best thing. Liquidity is what drives the market. Liquidity is what determines whether the price goes up or down; it's about supply and demand. Well, the best thing is for you to apply
[12:35] concepts from smart money, such as Fire Value Gabs, and tell yourself, "Look, this is the best way to trade, this is the best way to operate." It operates based on concepts
[12:48] specific to smart money, and here we have a clear example. Notice, the price reaches the fire value gap and turns around , then finds support at the fire value gap and continues. However, I could tell you,
[13:02] "Hey, ignore it, Smart Money is a recent addition. It simply complements scalping and funding accounts—quick ways to try to make money and lose it in the process. But it's not a perfect
[13:20] better ways. Smart Money is simply part of a larger machine that other traders who are just starting out through funding accounts, unregulated institutions, and scalping. You trade fast, which means
[13:36] you pay more in commissions and lose more, thus completing the cycle. The way to trade is through price action. through price action. For example, use support or
[13:48] resistance lines, use Fibonacci retracements. And notice how, if we connect different lines and connect Fibonacci levels, they give us exact support zones
[14:00] . Impulse, pullback, and continuation. We reach the diagonal line, we reach the Fibonacci zone, we reach this level of
[14:12] previous highs. This is the best way to trade. This It's the best way to apply rules that operate on a specific pattern. What I've done, obviously, is just explaining or
[14:27] obviously, is just explaining or parodying in some way what people do to try to sell you their rule or philosophy within the same pattern. At the same time, I explain the different philosophies that exist. As you've
[14:42] seen, the same pattern can be traded in different ways with the same traded in different ways with the same validity and effectiveness. You don't have to try to find the perfect way or the way so-and-so is
[14:55] selling you. You just have to see which way best suits you. However, these philosophies will determine your trading strategy. Because if the philosophy through which you trade a pattern is
[15:09] indicators, it will mean that your strategies will have specific rules or tools. If it's Smart Money, they'll have others. And if it's price action, they'll have others. They all operate on the same
[15:21] pattern. Yes. They're all profitable. Yes. However, the concepts you're going to have to learn are different. At this point, you don't have any trading strategy, neither profitable nor unprofitable. You just... I've
[15:34] helped you define the type of pattern and outlined the different and outlined the different trading philosophies so you can apply a specific set of rules— rules we haven't discussed
[15:46] yet, by the way—but it's important that you start defining things. Continuation or reversal pattern. Perfect. Check. What kind of trading philosophy am will depend on the trading philosophy , but I can't start with everything;
[16:00] I have to define one. The best and most generic in that sense is price action. Not because it's more profitable, but because price action itself gives you a broader set of tools that then allows you to
[16:12] pivot to other styles. If you start with Smart Money, you limit yourself to the liquidity zone. If you start with indicators, you limit yourself to everything else. If you start with price action, you're in the middle and can
[16:25] pivot later. So, what we're going to do next is explain two extremely important points. First, how trading works. You have to understand how trading works to know how to apply strategies, and second,
[16:40] What are the underlying principles of these trading philosophies or rules? Starting with the basics, that is, explaining how trading works, it all stems from one concept: fractality.
[16:55] everything repeats itself across all timeframes, and by choosing which timeframe you want to see one thing in and which timeframe you want to see another in, you can determine what you're going to do with your strategy and what
[17:09] trading style you're going to follow. Going directly to the tablet, you'll find it very easy with a simple table. Let's talk about different timeframes so we understand what I mean by this. We can
[17:24] start with different trading styles. As you know, we have swing trading, day trading, and scalping. We could go deeper into scalping, but that would be intrascalping and things like that. Let's forget about the names for now,
[17:37] but there are different timeframes. We have the monthly timeframe, the weekly timeframe, the daily timeframe, and the hourly timeframe, and this would be a basic foundation. If we go deeper, we would have
[17:52] different More timeframes: daily, 4-hour, 1-hour, and 5-minute. But if we go even further down timeframes: 1-hour, 15-
[18:08] minute, 5-minute, and 1- minute. What does this mean? Monthly, weekly, daily, hourly, daily 4- hour, 1-hour, 5-minute, and 1-hour 15-
[18:23] hour, 1-hour, 5-minute, and 1-hour 15- minute. These are the timeframes we'll consider depending on the trading style we want to use. trading style we want to use. So, on which timeframe do you want to see the
[18:36] pattern? On which timeframe do you want to apply the strategy? By defining these points, you define your
[18:49] understand not only the trading style you use but also how trading works. That is, if you want to trade patterns on the daily timeframe, you'll be
[19:01] patterns on the daily timeframe, you'll be swing trading. It that we won't define now. If you want to trade patterns on the hourly timeframe, you'll be trading a style related to day trading. Trading. And if you want to
[19:15] trade patterns with their rules and everything we 've seen so far on the 5- minute timeframe, your style will be scalping. But not only that, this is where fractality comes in. The pattern, the impulse, the
[19:31] pullback and continuation, for example, or any pattern you choose, will able to find it on any timeframe. want to find it on, that's it. But the best part is
[19:47] that through this you understand how trading works. And that's the question we're going to answer now because trading works by understanding because trading works by understanding the philosophy. That is, the
[20:04] we're going to follow involves a set of tools. mentioned indicators, we've mentioned smart money, and we've mentioned
[20:18] price action. What are the tools of price action? Well, support and resistance, acceleration and deceleration, technical patterns, deceleration, technical patterns,
[20:33] different tools specific to price action. Smart money has others. And the indicators have others. Each one has its own tools, right? Through these tools, you define how you're going to trade
[20:48] the pattern, the impulse, the pullback, and the continuation. Well, in continuation. Well, in price action, you'll use these tools to trade this here. Smart money will use its own, and the indicators
[21:01] will use theirs. And understanding this, what do we have to do? What we have to do before applying the strategy's rules to do before applying the strategy's rules
[21:17] tools to find the direction on a timeframe. What timeframe is it? Well, if you 're swing trading, you have to find the monthly direction. If you're day trading, the
[21:32] daily timeframe. And if you're scalping, you have to find the direction on an hourly timeframe. This is a general overview. Then there are variations. 15-minute chart at most, there's no problem, but that's in general terms, I
[21:47] mean. What does finding the direction mean? It means that you'll apply this whole set of tools to what I call the tools to what I call the higher timeframe. I'm using abbreviations now so I do
[21:59] n't go on for too long. Writing. Why? To know where the next two or three candles on that large timeframe you're trading timeframe you're trading
[22:13] in day trading are going. You'll look for support and resistance levels, acceleration and deceleration, impulses and pullbacks, different structures on the daily chart, and by combining all those
[22:27] structures, you'll know if the probability of the next two or three candles is one direction or another, whether it's going up or down. Once you know, for example, that it's going down, what are you going to do? Okay, this will be two or three
[22:43] Okay, this will be two or three bearish candles on the daily chart, for example, but the market is fractal. What does that mean? If there are two or three bearish candles on the daily chart, what will they mean on the 4-hour and
[22:59] hour charts? Well, this will translate like this: Impulse, pullback, impulse, pullback, impulse, pullback. And here we already find patterns. So on the large chart, whether it's daily for
[23:15] day trading, monthly for swing trading, or hourly for scalping, you're going to look for the direction through the set of The tools of your trading philosophy, which can be divided into price action, smart money, or indicators. And
[23:30] once you find that direction, you'll move down to a different timeframe and look for the pattern. Why look for the pattern? To apply to this pattern the set
[23:42] of rules that form a strategy that gives you a winning mathematical advantage in the long
[23:56] run. And this is precisely where everything makes sense: understanding that within the same philosophy—for example, price action, which is just as valid as
[24:08] indicators—neither better nor worse, none of the three, there are also different ways to apply rules, and that's what defines the strategy. The trading strategy isn't smart money, price action, indicators, or any of the other
[24:23] methods that exist. The strategy is, what is the philosophy? This one. Perfect. But within the same philosophy, there are tens and thousands of different ways to and thousands of different ways to configure and combine rules to
[24:36] determine a specific trading strategy . And that's where we want to see, regardless of the philosophy or school of thought that each person follows, whether one strategy is better or worse. Having already laid
[24:49] the foundations of Okay, so I'm going to explain the components of a trading strategy. We've already determined the type of pattern we're going to choose: continuation or reversal. We've also determined the philosophy through which
[25:04] we'll trade that pattern. For example, price action. We understand that, based on this philosophy, we need to apply a set of tools that are predefined within it.
[25:16] Why? To identify the direction of the larger trend—up or down—and then move to a different timeframe and apply the set of rules to the pattern we've already chosen to
[25:31] create this trading strategy. Now , within the trading strategy itself , what are the components we need to identify? Well, there are four specific components. Part number one: the hypothesis. In the hypothesis, I need to
[25:45] know what I want to see in that pattern, what set of tools I want to see combined and interconnected within that pattern to align with the direction of the larger trend. In other words, I know that the
[25:58] two or three candlesticks will take an upward direction, so Example. Okay? Going down a timeframe, what do I want to see on that lower timeframe to join that trend? Part two, execution.
[26:14] Part two, execution. How and when will I execute the position? How and when will I buy or sell to join the trend, whether it's bullish or bearish? Part three, stop loss and take profit, that is, knowing
[26:28] exactly how I'm going to exit that trade, that position. If the price moves against me, I set a stop loss, and if the price moves in my favor, I set a take
[26:40] profit. And part four, position management. I have to know exactly not do anything, or I might have to do something while the price is
[26:52] neither reaching my take profit nor my stop loss. That said, I'm going to give you an example of a trading strategy with each and every one of these parts defined so you understand exactly the format or structure you need to
[27:07] give to each element. So, going directly to the chart, it's about A day trading strategy, so my largest timeframe will be the daily chart. Before discussing the components of a
[27:21] trading strategy, what do I need to do? Determine the direction of the next two or three candles on the daily chart, that is, on the largest timeframe . And as we can see, applying different
[27:33] price action tools, I have a very interesting support zone here . We have one touch, another touch, another touch, another touch here, many more touches, and the price has not only
[27:48] reached this support zone, but first, it has done so in a decelerated manner—another tool. Second, it has done so in the form of a reversal pattern. Here we have a kind of wedge. And third, it is forming
[28:06] bullish candles at these levels, so with just three or four with just three or four determine that the next two or three candles on the
[28:19] daily chart are most likely to move upwards. Knowing this, what do I need to do? According to the from Timeframes. It's in these timeframes that I'm going to start applying these four elements that are part of a
[28:33] trading strategy, and I'm going to have to identify them. Element number one, what have we been discussing? The hypothesis. I need to know exactly what I want to see to join this
[28:49] daily upward trend. And what I want is to see how the price changes structure. We're seeing lower highs and lower lows, which is a downtrend, although this is a reversal pattern. What I want to
[29:03] see is a trend change. A trend is a series of higher highs and higher lows, so what I'm going to look for is for the price to break out, and not only break the diagonal of this structure, but also form a higher high
[29:17] structure, but also form a higher high on because this is the first point of what I want to see. Bam, a higher high What else do I want to see within the hypothesis? The moment the
[29:31] price stops rising—here we see that it's already reversing—what I want to reversing—what I want to see is that We've reached see is that We've reached Fibonacci levels. Fibonacci allows you to execute
[29:43] positions down to one-third, one-half, or two- thirds. As we can see, to determine the direction of the daily chart are one thing, and the tools used to formulate the strategy's hypothesis are another. Here, we're
[29:59] applying different tools. They're all part of price action, yes, but they're different. So, what I want to see is a pullback and a reversal. Let's move on. Here, the price is already falling. Perfect. Now,
[30:14] what do I want to see? That the price stops falling and starts rising. There, we're forming that movement. It's not a movement I like because this bullish candle is much smaller than this bearish candle, so I want to
[30:28] see a much clearer reversal pattern, and that's exactly what's forming. Here we have the bullish engulfing pattern. Let's stop here because we've gone off by one click. Perfect. This is the hypothesis. What do I want to see to join this
[30:43] trend? Now, there are more things. What are those things? Number one, execution. What do I want to see to execute this trade? this trade is, first, to go down a timeframe and see that the
[31:00] hourly chart is rising strongly, and second, to go down to the 5-minute chart and execute the trade the moment a diagonal breakout forms. As
[31:12] you can see, these are all the timeframes we mentioned earlier. Perfect. In this case, the breakout is already forming. We wait for it to be the breakout is already forming. We wait for it to be a clearer breakout and then we execute the
[31:25] position. Perfect. This would be part two of the entire trading strategy. Now we move on to part three: stop loss and take profit. Where do I place the stop loss and where do I place the take
[31:39] profit? Well, we go back to the 4- hour chart, which is the chart we were using before, and we're going to place the stop loss below the previous low. Here it is. And we're going to place the take profit above, or
[31:55] rather at, the previous high. This is how we're going to determine the stop loss. Loss and take profit. And finally, we have position management. In this case, what I do is use a moving average to manage the position.
[32:11] That is, I come in, set the EMA, the exponential moving average, I come in, set the EMA, the exponential moving average, and I set it to 50 sessions. This 50-session exponential moving average
[32:26] price reverses at any point on the hourly chart . As you can see, I execute the 30 here, and at no point does that moving average break. Therefore, step number four, which is
[32:41] position management and knowing what I do at each moment, is not altered at all. If the price, instead of going directly to the take profit, had risen and done so, what would I have done? The
[32:54] moving average would have approached, and I would have exited with more aggressive position management . But as you can see, these are all the timeframes, starting with the daily chart, moving to 4 hours,
[33:08] moving to one hour, and so on. directly to 5 minutes. Each timeframe has a function. This is day trading, but the same would apply to scalping, with the timeframes we mentioned earlier, and to swing trading,
[33:21] also with the timeframes we mentioned earlier. And each of these timeframes encompasses certain concepts specific to the trading philosophy we've chosen. The point here is that we've chosen
[33:35] a price action trading strategy, but this strategy only applies to a specific set of rules. This set of rules isn't representative of all
[33:50] differences come in. The philosophy only determines the tools you're going to use, and all philosophies are equally valid. However, within specific strategies, they aren't all equally valid because some strategies will
[34:03] allow you to earn more, and others will allow you to earn less. philosophy; it has to do with the set of rules. So, what I'm going to do next is explain how to know if one trading strategy is more
[34:18] profitable than another, by knowing what numbers the specific set of rules is providing. In this In this case, to find that information, you have to consider three different elements. First, how many
[34:33] times can you execute that trading strategy? A trading strategy, however good it may be, if you only execute it once every six months, is a strategy that gives you very few opportunities to enter. What happens if you also execute it
[34:48] once every six months and lose the trade? You have to wait another six months to run the following. Well, that's a point to keep in mind. Secondly, we need to consider how much we gain when we win and how much
[35:01] we lose when we lose. In other words, it's great to earn 4% when you win, but what happens if you lose 5% when you lose? , obviously, so it's not about how much you win or when you lose, but
[35:18] you have to take both factors into account . And then the last point is the success rate. It's great that when you win you win three and when you lose you only lose one. This could be very interesting at first glance. Now, what
[35:33] if your success rate is 10%, what happens then? Or, conversely, your success rate is 85%, but when you win you win 0.5 and when you lose you lose three. It's not an interesting strategy.
[35:48] So, to avoid getting confused with all this, the important thing is to keep these three elements in mind. How much do you earn? How much do you earn? How much do you lose? How much do you lose? Success rate and how many times you execute the strategy.
[36:01] Having the numbers on the table, we can go directly to Chat GPT and ask a simple question. I have a trading strategy with the following parameters. I run it once a week on average. Perfect. When
[36:16] I win, I earn 2.5%. Very good. And when I lose, I lose 2.5%. Very good. And when I lose, I lose 40% success rate. These parameters are quite acceptable and
[36:30] at first glance could define it as a good trading strategy. So, is it really a winning trading strategy or not winning trading strategy or not ? We simply attach them in
[36:43] ? We simply attach them in GPT chat, send it, and the GPT chat itself GPT chat, send it, and the GPT chat itself will tell us how it arrives at the conclusion, that is, what formulas it follows to reach the
[36:56] conclusion, and finally what the profitability conclusion is. And in this case we are seeing that this trading strategy with these specific parameters gives us an annualized return of approximately
[37:12] 23.07%. This is almost double the annualized return of much more passive and calm indices, such as the SP500. That said, we now arrive at the part of the free step-by-step trading course.
[37:27] Before I explain which video you should watch to access all the free content on my channel that's scattered everywhere, I want to tell you something. If you're not just looking for free, solo training
[37:41] , and you want to be part of a community of traders with more people, at different skill levels, and with less experience, to interact with them, interact with me, participate in live sessions on psychology, strategies, and
[37:54] money management, be part of a structured training program with exams and self-assessments that allows you to take a final exam, which, if passed,
[38:06] gives you access to a $10,000 funded account trial, participate in in- person and online events—in short, be part of Trading Lab—you'll find a link below in the first pinned comment and in the video description to get more information
[38:22] about Trading Lab and see if it interests you. This would obviously only be for people who want to take the next step in their journey, who want to next step in their journey, who want to speed up their training, or who want to be
[38:35] part of a family that goes far beyond trading. Hey, if you don't have money, if you're not interested, or if you do n't like being part of something that goes far beyond simply trading, you have
[38:48] free content from me daily to continue learning. However, it is scattered content and content for which I do not provide that daily support. To do this, I recommend that you also go down to the first pinned comment or to the
[39:02] description of this video and you will find a short video. That video is a complete course on how to start day trading for beginners. If you watch that video, you will not only have the information you need to start
[39:18] trading. We talk about trading psychology, how to analyze a chart, profitable trading strategies, money management and position sizing, how to trade without money, and so on.
[39:32] But also, at the end of the video, you'll find that free step-by-step trading course, in which I organize some of the videos I have
[39:44] psychology, videos about strategies, videos about price action. Videos on monetary management, opposition management, and more. I give them meaning and explain how to visualize them to be
[39:58] part of a training that is entirely on YouTube, but scattered. Remember, if you want more personalized training, pin the first comment and add a description to the video. On the other hand, if you want
[40:12] free training, even if it's scattered, fully available to you, also check the first pinned comment and description of this , and that it was useful to you, which is what's important. If
[40:25] so, like, subscribe, share with friends and family, and share with friends and family, and we'll see you in the next video. God.