5 Levels of Day Trading Competence — Full Breakdown & Transcript

[00:01] these exact five levels. You know, most people get stuck at level three and never progress. Let me show you where you are and how to move up because level three, that's where most trading careers go to die.

[00:14] you're there. But before we talk through these five levels, I need you to do something. Be brutally honest with yourself about where you actually are. Not where you want to be, not where you think you

[00:27] should be, where you actually are. Because here's what I see all the time. Traders lying to themselves about which level they're on. We have a saying on the desk. We got it from one of the most tenured traders here. He's worked with

[00:40] many of the best traders in the world, independent traders, elite prop traders, traders at really well-known hedge funds. Like he's seen what makes traders great. And he's also seen what holds them back.

[00:52] And he says the difference maker is two words. Brutal honesty. You have to be brutally honest with yourself. I'm asking you to do that right now. If you can't, please turn off

[01:05] this video, go watch something else. But if you want to move forward, commit Pause the video right now and write in the comments, "I'm going to be brutally honest with myself." With brutal honesty, you can move

[01:19] forward. Without it, you'll be a level two trader convincing yourself you're a level four. And that lie, it just keeps traders stuck. So, as we go through these levels, I

[01:32] want you to identify yourself honestly, even if it's uncomfortable. Because once you know where you are, I can show you exactly how to get to the next level. And let's start at the beginning. Here's how this works. Every level has three

[01:46] how this works. Every level has three characteristics. Mindset, behavior, and P&L pattern. And here's the critical part. You can't skip levels. You can't go go level one to level four. You have to progress through these each

[01:59] Because each level teaches you something you need for the next one. And level three, that's the danger zone. This is where a lot of traders spend years grinding, making just enough progress to not quit, but not enough

[02:13] progress to actually break through. I'm going to show you how to recognize if you're stuck there and what it takes to get out. All right, let's go through all five. Level one is the gambler.

[02:25] The mindset of the gamblers I can feel which way this is going to go. The behavior is you're taking trades based on gut feeling. No real written rules, no actual plan. You see the stock moving and you just kind of jump in. Or even

[02:39] worse, you see the stock not moving and hope it starts to move and you jump in. Sometimes you win and when you win, you think you're a genius. You feel great about yourself. You start smelling your own perfume, right? Most of the time you

[02:52] lose though and you don't actually know why. The P&L pattern of the gambler is chaotic. It's big swings. You're up 3,000 one day, you're down 4,500 the next. There's no consistency.

[03:06] But how do you graduate from level one? Three steps. Write down your entry rules. Write down your exit rules. This is for every trade you take. Write down your entry rule, write down your exit rule

[03:18] entry rule, write down your exit rule and follow them for 30 days. That's it. Time investment is one month. Before you take any trade, write down rule and follow it

[03:33] for 30 days. Do not take a trade until you write down your entry rule, write down your exit rule and make sure you follow it. So, here's the problem. Even when we tell people to do this, most people

[03:45] spend six months here because they start and then they see some improvement, right? And And they stop following this rule. They stop following this objective. They start to backslide. You lose the brutal honesty that forces

[03:58] The fitness industry survives on this exact behavior. People make progress and then they abandon the habit. And then they slide right back to where they started. Some traders spend two, three, even five

[04:12] years here. Just in total randomness, but you don't gambling, the faster you're going to move to level Let's talk about level two. It's the system seeker.

[04:25] The mindset of a level two trader is, I just need to find the right strategy. If I'll be in the best place, right? You're reading every book. You're taking every course. You're backtesting strategies. You have all the rules now. You even

[04:39] move, why they're on their chart, everything else. But you keep changing what your focal point is. Every time a strategy even shows signals of stop working, you abandon it and you go and find a new one.

[04:53] You're essentially just a strategy tourist, right? Your P&L pattern, well, a lot of it's more controlled, but you're still losing. Smaller losses, certainly winning days, but net-net, you're typically still red or even just

[05:08] chopping around a little bit. Here's what changes at level two. Here's what changes at level two. You're learning the language of trading. You've learned support. You've learned resistance. You've learned VWAP, volume.

[05:20] You're learning about trading. But you're not yet learning how to trade. Here's how you graduate from level two. You pick one strategy, only one. You pick a single strategy. With Scalp

[05:34] Radar, we teach you five. You pick a single one. And then you trade it for 20 reps, 20 focused reps. No switching, no looking at other strategies, 20 reps. You notice this isn't time based. Why isn't it

[05:48] how often you're going to get that trade. But you get a number, 20. Most quants actually think of it as like 35. We've found that if you're studying your trading,

[06:01] you can actually get to 20 and gather all the important information you need. Most traders can do this in under a month because this level teaches And it teaches you something more important than the quality of the

[06:14] strategy. The strategy isn't the problem. Your execution is the problem. You need to stick with this for 20 focused reps. You'll learn more about the strategy and even more about yourself

[06:27] if you do this. Once you're through that 20 focused This is the level I warned you about, right? Level three is the break-even grinder. This is the cruelest level because

[06:40] you're so close. You can feel yourself so close. The mindset of level three is, "I'm doing everything right. Why am I not profitable?" a strategy. You follow your rules mostly.

[06:56] You're managing your risk. You're reviewing your trades. You have You have losing weeks, but at the end of the month you're basically break even. Maybe even up a little, maybe down a little, but just kind of stuck.

[07:10] little, but just kind of stuck. Your P&L pattern is observably flat. You comes right back down. Once Something that's fascinating about level three is you know enough not to go negative or not to continually slide

[07:24] down in your P&L pattern. So it winds up being flat. Grinding. No momentum. One trader on our desk, Jackie, spent months at level three. Jackie would have a great week, make

[07:38] $18,000, think, "This is it. I figured it out." Next week, lose 2,000. The next week, lose 5,000. The next week, lose 12,000. frustrating.

[07:52] Jackie was following the rules, managing risk, doing the work. So, why wasn't it working? So, I asked Jackie one question. Show me your last 10 trades. We looked at them for maybe 60 seconds,

[08:04] right? I'm not talking about each individual execution, each trading idea. Show me the last 10, right? After 60 seconds, I just said, "You're following your rules perfectly, but you're not enforcing your standard."

[08:18] said, "W- What's the difference?" I told him, "Your rules tell you when to enter and exit. Your standards tell you which setups are worth taking."

[08:30] Jackie was taking every setup that qualified, but half of them are just C setups. And C setups, unfortunately sized at B risk, produce break-even results. Bet sizing is the most powerful tool in

[08:45] standards, it becomes a weapon against you, not one for you. Jackie actually wasn't breaking rules. Jackie just had no quality filter. Jackie sized trades based on their recent results.

[09:01] Everything was about Jackie's results. Jackie would start doing well. Jackie would start sizing up. Jackie would start doing poorly. Jackie would start sizing down. None of the focus was on the opportunity

[09:13] created by the market. And markets are opportunity-generating machines, but not all opportunities are equal. equal. So, Jackie simply created three filters.

[09:25] So, Jackie simply created three filters. Does it meet my technical criteria? Is the risk-reward at least three to one? Now, think about criteria? Is the setup and the trade actually there?

[09:40] The second one, is the risk reward at least three to one? because you're like, "What about one to one scalps?" That's fine. You can take a C trade. You can take a smaller sized trade, but

[09:54] You can take a smaller sized trade, but you cannot size it as a B unless that risk reward is at least three to one. And then the third thing, do I clearly see

[10:06] the opportunity? And even more importantly, do I feel the opportunity the right way? What's fascinating about this little three-step process? Does it fit my technical criteria? Is the risk reward at least three to one?

[10:22] And do I clearly see and feel the opportunity? What they were doing with this, Jackie created a grading system. Here's how. None of this was hope-based. None of it was about how Jackie's

[10:35] performing. Every trade started with zero risk. And what Jackie did was fascinating. Jackie let the market earn the risk that was going to go into the trade.

[10:49] Jackie didn't say, "I'm going to size up or size down based on how I'm trading." Jackie said, "I'm going to size up or size down because the market is telling me that there's a better opportunity here." Just using that simple three-step

[11:03] process. First month with this new filter, Jackie took 11 trades instead of 43. Made something like $42,000, right? Not because the setup changed, but the bet sizing changed. That was the

[11:18] level three breakthrough. Quality over quantity. Jackie didn't need more trades. No one really needs more trades. You need better trades. You start with zero risk.

[11:32] Anything less than a C gets zero risk. Your default isn't B risk. Your default is zero. And then if you have the setups that check in your favor, if you have those three criteria starting to be met, your

[11:46] C setups get 5% of a daily stop. Your B setups get 15% of a daily stop. Your A setups get 30% of a daily stop. And then your A+ setups, they get 80% of

[11:58] This is exactly how you graduate from level three. You add a quality filter. Not just does this tree trade meet my rules and how am I doing in my trading, but do I truly see and feel the opportunity?

[12:13] What's fascinating is once you use this structure, I mean, people spend years at this level three and thinking they're at level four or level five, but they're firmly planted in level

[12:26] Once you start using a structure like this or the the structure we just gave you, the time invested here tends to be about two months. I'd rather spend two months hyper-focused than years hoping. If

[12:39] failing. You're actually building the foundation for level four because level four is where everything changes. Level four is the consistent earner.

[12:51] This is where you want to be. This is where every trader sets out to be, right? You can't get to level five until you progress through level four. Level four is the area where more people will feel great about their trading.

[13:04] Level five is this mythical spot that everybody does want to get to, but level everybody does want to get to, but level four is where people mostly hope to get. The mindset of level four is I know what I'm doing. I trust my process. Think

[13:18] every day feel like I know what I'm doing and I trust my process, that's That's where everybody wants to be as a trader. Your behavior is you trade more selectively. Everybody talks about

[13:32] Right? Oh, I'm just going to be a sniper. But in level four, you're a sniper recognizing high-value targets. Right? You make more. You're selective. You

[13:45] pass on more mediocre setups without hesitation. And then when your best hesitation. And then when your best setups appear, you execute flawlessly. Your P&L pattern for level four is consistent monthly profits. Typically

[13:58] consistent monthly profits. Typically not huge, right? But very reliable. You're creating a baseline for [snorts] yourself here. $5,000 to $15,000 depending on account size, but really what's changed here?

[14:11] individual trades and you start trusting process. The new challenge, scaling. Can you stay disciplined when the size

[14:25] gets bigger? The time investment here months. And most importantly, this is the first time you earn the right to increase your daily stop. Before this level, you

[14:39] shouldn't even consider it. This is fascinating to think about I have two weeks of consistency, I'll increase my daily stop." Forget that for now. Think about the levels. If I'm at level four,

[14:53] that's where I've earned the right to start scaling my account. If you're not firmly at level four, hold off and just get good first. You really shouldn't even consider scaling your risk,

[15:08] meaning increasing your daily stop, until you get to level four. Your income range here is your baseline, right? We have traders on our desk making 60,000. 200,000 a month just with their baseline. And then,

[15:22] there's level five. Level five is the master trader. eight-figure traders, even people aspiring to be nine-figure traders are The mindset for them totally different than any other

[15:37] mindset. Trading's kind of simple. But, execution is everything. The behavior is they actually trade less than level is they actually trade less than level four. They are so patient. They are so

[15:52] selective. They are so ruthlessly disciplined. They wait for their big pitches. And when it comes, they swing the bat hard. Let's talk about them trading less. It's not that they're taking less executions.

[16:06] It's that the gradient of their sizing gets so concentrated into the best setups. So, they're still building their baseline. They still know that they can make a pretty good living just on their basic trades.

[16:21] But, what happens is that they can actually size up in their best setups so much more because they built their baseline all the way up. So, when we say they trade less, what really happens is they're not

[16:33] pushing risk until those pockets that tend to cluster, right? Opportunity sets tend to cluster when they become A+. cluster when they become A+. Their P&L pattern is exponential. And

[16:46] risk. But, it's because they mastered the size and the scaling and the emotional control Trading sort of becomes boring most days. They're not really excited.

[17:00] They're not stressed. It's just kind of work. It's highly profitable work. These master traders share five characteristics. They have a routine that they fight for. I mean, they protect that routine like you would not

[17:15] protect that routine like you would not believe. They never break that routine. They know exactly what they're looking for. like, "If this happened, that would be great. If this happened, eh it's not so

[17:28] be great. Eh if this happened, it wouldn't be so good, right?" They pass on everything that doesn't fit. Or they size it so far down that it's

[17:40] for one of our traders who are at level five to risk less than 1% of their account most days. And then instantly when the opportunity gets presented, risk 70 to 80% of their account.

[17:53] They're passing on so many things that don't fit. And they scale the size based on clarity, based on that model we talked about before. Most importantly, they all treat trading

[18:05] like it's a business. They are so clear with all of their stats. They know their business better than anybody. it's so fun to talk with traders at level five because the time investment,

[18:21] this for the rest of their lives. Their income, they tend to be in the seven figures and much higher. Most traders will never reach level five, unfortunately. And that's okay. You know, level four is a really great

[18:34] place to be. It's consistent income. It's professional execution. But if you to stay in the game long enough to master it. Five levels. Now, figure out where you are.

[18:47] Be honest. Which level are you at? Remember when I asked you to write in the comments that you were going to be brutally honest with yourself? Now go back to that same comment and write your level today.

[19:01] And then come back to this video every time you move up. Now you have a road And you have markers that you can use to see how long it took you to get there. Because wherever you are in this progression, you're not stuck.

[19:17] You're just in process. Progress isn't linear, but it's inevitable if you stay in the game. You don't need to be at level five to You don't need to be at level five to win. You just need to move forward one

[19:29] And if you do that, you're going to get there.