Best Trading Tools Introduction

In this blog post, we will explore the best trading tools used by Axia Traders. We will break down for you three videos that explain the tools in a different light than you might be used to. Regular readers are familiar with our in-depth use of tools such as Market Profile, Volume Profile, Price Ladder (DOM), and Footprint. On top of that, we will dive into Bookmap and Cumulative Delta as well. The key objective of this article is to explain WHY and WHEN we use these tools and how combining them can make you a more efficient decision-maker.

Best Trading Tools

Footprint, Bookmap, and Price Ladder – The WHY

Different tools serve different purposes. A good analogy is a football. When you use a tool such as a price ladder, it gives you immediate action, the intention as well as what just happened. Footprint on the other hand gives you information about what actually happened. Where exactly the ball went but not the intention of the player where he wanted to pass it. Your goal is to leverage these tools so they maximize your information processing capabilities.

So when do you use these tools?

• Use the price ladder to understand the real-time playing field.
• Use bookmap and footprint to confirm what you are seeing on the price ladder.

Let’s talk about a great example of combining all three tools of Price Ladder, Footprint, and Bookmap together.

Case study of trading tools:

• Price Ladder – if you think somebody absorbs at the price ladder, you can go and check the footprint if a large number of orders is being accumulated at a given price
• Footprint – seeing this absorption on its own on the footprint, does not give you information on how the orders got accumulated. Was it one large order or a series of smaller orders? That is what bookmap is gonna help you with …
• Bookmap will tell you if there was a large resting order or if the orders started to build after a certain period of time

Use the tools in combination. Let them confirm what you are seeing on a price ladder. Combine them.

There are two important tools we at Axia Futures find valuable. Market Profile for a contextual understanding of where we are, where are we trying to get, and how good of a job the market is doing getting there. Market Profile gives us the superpower of seeing inside the price action movements for what they really are.

We have talked about Footprint and what it can tell you. It is the harmony with Market Profile that can create an interesting opportunity.

Case study of trading tools:

• Footprint offers and creates a b shaped profile on a lower timeframe
• The Market Profile confirms that the location where this b shape profile was created is a good location to get a reversal from

Understanding the landscape using the market profile is one way to gain an edge and then you can use the Footprint to pinpoint the exact location for the trade.

Footprint, Delta, Market Profile, and Price Ladder – The HOW

When it comes to your charts and indicators, a good rule of thumb is to ask yourself: What value will this bring to my decision-making process? Where will it improve my process? If you can’t answer these types of questions with a clear one-sentence answer, then there’s a good chance that you are wasting some of your mental capacity. Cut the fat and notice if there is any impact on your decision-making process.

In this video, Richard breaks down every indicator he uses and what value each one brings to his decision-making process.

Here is the breakdown of trading tools:

• 60-minute candlestick chart – how far the market can go
• Market Profile chart – for the contextual layer, the landscape of the market
• 1 or 5 min charts – for managing risk
• Short-term moving average – for fast momentum trades
• VWAP – for directionality of the day
• Relative volume – is the move being built on a strong foundation or weak foundation
• Cumulative delta – who is controlling the aggression, is there a divergence between price and delta

Given all of the above, we have sat down with one of our traders and designed a masterclass exactly for that purpose. For the purpose of finding the best trading tools. If you want to learn in-depth, how we combine all of the above, don’t forget to check out the masterclass here.

If you liked this type of content, you might check these videos as well:

• Junior Funded Trader 2020 Performance Review
• Lessons From My Biggest Trading Loss
• Trader Training: How Long Does it Take a Trader to Become Consistent and Profitable | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Thanks for reading again and until next time, trade well.

JK

How Not To Lose Money Day Trading Introduction

In this article, we will explore three tips on how not to lose money day trading. We will start off by introducing the concept of high conviction setups, where professional traders usually size up. Combine that with the understanding that the pattern is not a trade setup and how the sequencing of clues leading to that pattern is very important. And last but not least we will cover the law of diminishing marginal returns and what role it plays in your trading progress. We take three concepts and distill three lessons out of them that you can start following to limit your losses in day trading. If you are into day trading and particularly enjoy scalping, don’t forget to check our previous article 2 Ways To Scalp The Exhaustion Move.

Three Tips On How Not To Lose Money Day Trading

High Conviction Setups

If you look at professional traders in Axia Futures, many of the 8-figure traders don’t have a winning percentage greater than 50/50. So how do they make money? By maximizing their high-probability trades. By pushing their size when the odds are highly stacked in their favor. Now how do you do that? Time! Time and deliberate practice.

Many traders have an assumption that after 6 or 12 months of trading, they know their high conviction setups. For some, this might be true, but there is a great danger in this thinking: maximizing your size in the under-developed setup will lead to greater losses. This damages your confidence and your account. So what is the “LESSON” and what is the “BUT”?

Lesson:

• You win in trading by maximizing size in your high-conviction setups

But:

• Don’t forget that sizing up too early in your career might lead to outsized losses and damages your confidence, therefore …
• Be patient and build very detail depth of your best trades before you start scaling up.
• If you feel you are starting to have a grasp on high probability setup, increase size for this particular setup by 2-3x and test it

Pattern Is Not A Trade Setup

One mistake new traders make is that they come to trading trying to trade just the pattern such as a flag or triangle. And there is nothing wrong with that, but it hugely limits your ability to maximize your profit. In Axia, all our Junior and Senior traders build a sequence of clues and triggers so that when the simple flag break comes, for example, they are aiming for a much larger directional move because their understanding of the wider structure gives them greater ability to maximize their profit.

Lesson:

• Don’t trade just patterns, understand when the pattern has the highest probability of success. For example, if there is a nice scalp, but opportunity can unlock swing move, don’t limit your trade to the scalp.

Law of Diminishing Marginal Returns.

A different period in your trading career brings a different level of satisfaction. When we start on our trading journey, we can see the leap jumps in our market understanding and get frequent dopamine spikes. As we acquire more knowledge, it might start to feel that our learning curve starts to stall. We should not get discouraged by that. It is called a law of diminishing marginal returns.

We only need to understand that the snowball effect might come with more distanced milestones. For that reason, we need to be patient and focus on our skill acquisition.

Lesson:

One of the most reasonable ways how you can judge your progress is by following metrics that improve your trading. Not P&L but, how good you are in:

• a) eliminating inconsistencies
• b) sticking to a process that is helping your trading

Use weekly and monthly score card system and track your trading like it would be a business. Meaning, what are the numbers, what is the hard evidence of things not working. What do you do to change those things. Stick to the process of doing things like that long enough and you will become a profitable trader.

If you want to learn how Axia Traders eliminate their mistakes in day trading, visit the free workshop we are running at: https://go.elitetraderworkshop.com/Free

If you liked this type of content, you might check these videos as well:

• Junior Funded Trader 2020 Performance Review
• Lessons From My Biggest Trading Loss
• Trader Training: How Long Does it Take a Trader to Become Consistent and Profitable | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Thanks for reading again and until next time, trade well.

JK

How To Trade To Your Strengths Introduction

In this blog post, we will discuss how to trade to your strengths. How one can learn to identify and work on his strengths. How some weaknesses can become future strengths and what a trader needs to do to improve his trading. Trading is a game of observation. It is so hard to master because you have to combine a lot of moving parts and be patient with their integration. Sometimes our progress is limited by the way we work with our strengths. Many times we try to fix weaknesses completely missing the point that if we would have focused on our strengths, we could have 10X our progress. If you like this type of article, check our previous post The Fishermen where we explore learning via negativa à la Nassim Taleb.

This article is based on the video down below.

Why To Trade To Your Strengths

Focusing on your strengths is crucial. It is encoded in the statement already. You want to start from the position of strength, not weakness. Not just in trading, but in anything you do in life.

Imagine you are about to fight an amazing fighter. You are great at submission grappling techniques and have terrible kicking techniques. How would you feel in a fight against a fighter whose kicking technique is amazing and rules of the game dictate that only legs are allowed? No submission grappling allowed. Would you still compete? Yet we do this every day in our trading.

Part of the discovery as a trader is to explore all our strengths and weaknesses. Let’s say that is the period of the first 12 months of intensive training. In those 12 months, you should get exposed to as many things as possible. Those 12 months are all about observation. It is the time when you practice your art of observation, so in the next 12 months you can narrow down your focus.

This trader summarised why he wants to play to his strengths by the following:

1. Improve performance -> become a better trader
2. Learn more about ourselves
3. Develop our skillset -> don’t be the jack of all trades
4. Achieve potential

Questions To Ask To Trade Towards Your Strengths

Here is the list of questions you can constantly ask yourself to evaluate your strengths and weaknesses.

1. Am I annotating my trading well enough so I can learn about my strengths and weaknesses?
2. What are my strengths as a trader and how can I master them?
3. What are my weaknesses that I wish to develop into future strengths?
4. What are the weaknesses that are holding me back and should be phased out?
5. What is one limited behavior holding me back and how can I change it?

You need to log and observe a lot first before you can identify what needs to be phased out. Be patient, and change techniques, but document what you see, feel, expect and do to the best of your abilities.

List Of Trading Strengths And Weaknesses

Here is an example from Prinesh about his trading strengths and weaknesses.

Strengths

• Cash opens
• Entering near the high or low of the session
• Entering at the start of bursts
• Positional (over hours)
• Strategic

Weaknesses (I wish to develop)

• Macro Trading Events
• Build up a position as conviction grows
• Adding on rotations

Weaknesses to phase out

• Pre-emptive breakouts near extremes
• Trading pullbacks inside the range
• Trading 11:00-13:00 and after 16:00 (London time)

Now go back to your charts, your trades, and your journals, and annotate categories of strengths and weaknesses. Stare into it until you distill 5 examples for each category.

How To Trade To Your Strengths Examples

Let’s have a look at the strengths that Prinesh identified in the Eurostoxx example.

You can clearly see, that in this example, he was able to execute around cash open, near the high of the session, and took a positional trade. He has combined three of his strengths.

Now let’s zoom in on the opposite. This is the weakness that this trader is working on developing.

The biggest weakness Prinesh has identified is his current inability to act quickly and early. He needs to work on his preparation and understanding of these events so he can be confident and not hesitant when the news comes out.

Last but not least, a weakness to phase out. This specific weakness is about pre-emptive entries into a breakout near the low of the day and entering near the high of the day into a supposed trend move.

If you are seeing similar behavior in your own trading, now you have a blueprint for what to do next.

Key Trading Takeaway

Remember

• strengths evolve over time
• market conditions can impact strengths
• easy to be obsessed with weakness at the expense of underplaying your strengths

Action points

• raise performance by focusing on strengths
• identify and develop certain weaknesses into strengths
• phase out other weaknesses that do not serve you

Thanks for reading. If you liked this type of content, you might check these videos as well:

• Junior Funded Trader 2020 Performance Review
• Lessons From My Biggest Trading Loss
• Trader Training: How Long Does it Take a Trader to Become Consistent and Profitable | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Trade well.

JK

How To Avoid Trading Losses Introduction

In this blog post, we will review tips on how to avoid trading losses. Have you ever entered a trade and talked yourself out of the trade based on minor obstacles? In this post, we will review common excuses that get us out of the trade way too early. These premature exits might save us a few bucks in the short run but prevents us from building a high conviction playbook. These are the trades that in a long run will build our P&L. So next time you will try to find a reason for getting out of the trade, ask yourself about the severity of that reason. If it is only a minor reason, let alone a psychological reason, you know you must hold and build that conviction muscle.

The best way how to prevent yourself from doing the same mistakes repeatedly is through the art of journaling about which we have written numerous posts, good place to start is here: How To Do Yearly Trading Review Like A Pro.

This post is based on the video down below.

One Rule To Prevent Mismanagement Of A Trade

One of the important ways how to prevent trading losses is to have a set of strategies with a positive payoff function. This means, that any mismanagement of a trade that has a larger P&L potential prevents your overall P&L curve to grow. This is typically about:

having a plan and breaking it or not having a plan at all and acting reactively

Basically, you have a plan to sell or buy, but by the time market gets to decision making point, you start to look for a reason not to take action. It can be anything from the order flow, price action, or news that is coming out to the most typical “it did not look right” type of excuse.

Another example of breaking the plan is the justification around the exit. You are in a trade and suddenly you start to rationalize why the trade is not good anymore. Typically the questions you should ask yourself is:

what are you protecting yourself from?

Trade “is not working” is simply not enough to justify a decision to get out. It is all about setting the expectation prior to getting into the trade and then confronting them with the reality of the trade. The key thing every trader needs to build is to develop a rule-based system, that enables them in real-time to check the criteria for entry and exit. A real-time questioning framework that is easy enough to follow under pressure, especially when trading a very short-term time frame is an absolute must.

Trading Examples

In the first example, we have a Bund trade, that finally broke a key level. Now we are facing the situation about the access to the trade. Price action suggested there was a lot of absorption, a negative delta was high but we did not move down. We can immediately use this argument that the absorption will lead to a reversal, therefore we should not access the trade here. That is the wrong approach. The right approach should be. When X will happen I will do Y. In this example, “when absorption stops, I will access the trade at 171.77”

Observe a price ladder action to see what happened after the market stopped absorbing.

Now let’s compare this example in Bund with the similar example from the previous day. In both examples, Bund broke the IBL (Initial Balance Low) and continued lower. If you got short in the first example (trade on the left) and placed your stop at the obvious spot (above IB low), you would have made a nice swing profit. Not having the right questioning framework, you might have covered a small loss early (trade did not work immediately), only to see the trade develop further. Would you save some money in a short run? Maybe yes. You might even feel good for a short period of time how smart you were for exiting early, only to give yourself a beating after seeing the swing move down.

Let’s compare it with the second trade. Same example, different result. This time, you have entered after the absorption we have discussed above, and continue lower. Only to see the relentless bid reversal. You were really not wrong on the trade until it started to push into the IBL. That was the moment to cover. Yes, you have lost on a trade, but you have built that long term resiliency muscle and used your questioning framework.

Key Takeaways To Prevent Trading Losses

Build a questioning framework for both access (entry) and (exit). The shorter the timeframe, the more energy, and awareness your brain will need to process the real-time questioning. It will prevent you from losing over time and give your P&L growth a much greater chance.

Thanks for reading.

If you want to learn how we trade the markets in much greater detail, don’t forget to check the free webinar we are running at: https://www.elitetraderworkshop.com.

If you liked this type of content, you might check these videos as well:

• Junior Funded Trader 2020 Performance Review
• Lessons From My Biggest Trading Loss
• Trader Training: How Long Does it Take a Trader to Become Consistent and Profitable | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Trade well.

JK

Top 5 Mistakes Beginner And Retail Traders Make Introduction

Welcome to the top 5 mistakes beginner and retail traders make. The lessons described below are based on the adjusted transcription from the video that has been recorded by our Junior trader Bogdan. I personally relate to all of them, but those that resonated with me the most are Going Live Too Early and Not Intimately Understanding Your Tools And Markets. I find this video very helpful mainly because as Bogdan has mentioned, it is not some generic copy-paste version of top trading lessons circulating the internet but hard lessons and observations from being on the actual trading floor. This is what @Trader_Bran wrote about it:

So enjoy the transcript of the video down below:

Introduction

Hey guys, welcome to the top five mistakes that beginners make while trading futures or any trading for that matter. These lessons are collections of lessons I learned by myself, others from the trading floor, and the sort of collective shared experiences of many who have come before as well. Enjoy.

#Lesson 1 – Putting Yourself Into A Box Too Early In Your Career

Too many times, I see a lot of new traders, a lot of junior traders on our floor, on Twitter, and on internet forums, who love to put labels on the kind of trading they do. And of course, this just extends to everyday life. It’s not just trading, but obviously, within our sphere, we see this a lot where a trader may see how a piece of news affects markets and the huge burst of volatility. They may get scared and start making excuses like “I’m not a news trader”. Or someone who may trade news very well may look at a chart and say: “Oh, you know, I can’t make sense of this. I can’t be consistent in this kind of trading”. And so they say, I’m not a technical trader, I am a news trader. I’m going to be a scalper or x, y, and z type of trader. So here are basically two mistakes. First, you are trying to cut the market up into a very small, convenient box for you to understand, which is a mistake. Especially if you’re new to trading and you have the outsider’s perspective, you have newbie eyes to look at the market and it is very difficult to break up a very complex organism, a complex system like markets into a very convenient box for you to understand. Or take the example of those who say they don’t look at news, they don’t look at fundamentals, because it’s all reflected in the chart. This form of judgment happens too quickly, especially if it happens early in your trading career. Now, for those who are very new to trading, they will find someone who is just an excellent chartist for example. It could be someone like a senior trader who has years of knowledge reading the charts. But that’s just because of their experienced eyes, the lens through which they see things and the way they would describe certain things, and see certain things that may seem completely different to you. This very comparison or inspiration by this trading role model will lead you down the wrong path into overly specialized trading too early in your career. Becoming a chartist only because of this false specialization. This mindset might block your learning and you’ll never open your mind to the possibility of trading news and maybe who knows, you would have become the fantastic fundamentals newsreader or vice versa if you would not pigeonhole yourself into this box of overspecialization too early.

You see this a lot on online communities where people like to place themselves in various tribes, like, “I’m only trading on the ladder”, and my tribe is the best the price ladder tribe, and there’s no other. I’m the best everyone else is an idiot, nothing else works, and so on. So it is very dangerous leaving down that path of the ego and safe tribalism. Now, what I would say is, if you have been finding yourself and if you have been trading anywhere between 3-24months, you should not be making these kinds of claims like I am an X, Y and Z trader because the markets will evolve and so must your spectrum of tools. And you have to understand where you place yourself within that spectrum over time, not too early in your career..

#Lesson 2 – Going Live Too Early

Going live too early or perhaps putting too much pressure on yourself too early. So this is one mistake. I made this mistake myself very intimately at the beginning of my trading career and I see this time and time again, which is this obsession to race to trade live or to trade with some kind of skin in the game simply too early. Now, obviously, don’t get me wrong, skin in the game is essential, especially when learning but that should come much, much much later down the learning curve than one would expect. I see this a lot with a lot of the junior traders where their ability to learn and to soak in information is high. So in its pure sense with no emotional attachment to trading, the quality of learning is just way better. The minute they add pressure to themselves, even if they’re not live, but let’s say there is a requirement for them to pass a funding trial to go live or to meet certain criteria, the learning is suppressed. So in any case, whatever pressure you apply too early the learning curve will be most likely affected. You’re regressing too early. I’ve experienced this a lot in my career and it’s very easy to delude yourself that you are learning when in fact, you are not, which is going to be my point number three. So remember, it’s very easy to fall down that path.

Now let’s take an example of my desk mate on the other hand. So my desk mate here on the London trading floor was on the sim for about 16 months before he went live. Now, of course, during that 16 months, he also had a period where he had to pass a sort of a rules-based assessment for him to be funded to go live. Nevertheless, 16 months for him to go live. Most people watching this video right now, myself included, would not spend anywhere near that amount of time, watching markets, studying markets, really reflecting on what they’re learning. Too many of us will go in headfirst thinking they’ve got this, this is easy, and so on, only to really not only drop your whole account to lose a lot of money, but then to not really learn anything from it. Because of that rush, that agitation that FOMO to get live as soon as possible.

#Lesson 3 – Not Having A Structured Learning Process

Okay, so let’s talk then about mistake number three. And this is really something everyone can implement right now, from day one. Your progression does not start until you get these things right, which is a proper routine and a proper structure every single day, weekends included. This means you’re going to show up and have a morning routine, you’re gonna have a preparation routine, before the market opens, you’re going to consistently trade the same market hours for as long as possible, every single day when the markets are open. And then you’re gonna go through a period of reflection of the debriefing when markets are quiet. And of course, doing something of a more macro a wider approach on the weekends. That is the bare minimum entry requirement of hard work that you should be doing to even be considering having a career in trading. Ticking off boxes, day in day out, reflecting over time what is the proper debrief for you. What are you trying to capture from the markets? What are you trying to achieve? What evidence are you trying to gather and learn? How are you understanding the market through your own lens? It is so many of these little things which count but makes your eyes spin at the beginning. But there is no way around it. And, you know, perhaps you skip reading here because you already know all of that but it’s probably the most important point in these lessons. You need to have a learning system, a debriefing system, a way for you to reflect on good trades, bad trades, and understanding where that is and how to access it fast.

Relating to mistake number two, which is putting pressure too much on yourself too early, even by being on the sim trading thinking about taking trades is one step removed from pure learning. When I bring up your learning what do I mean? It’s sitting there day in day out, not even taking trades, even on the no consequence simulator. It is just sitting there observing markets holistically, looking at how they reprice risk, how they price risk, how news affects them, how news doesn’t affect them, how the market profile looks like how the order flow looks like when you know markets move around and everything. So you’re soaking in how are you learning from that process, and then you’re adding another layer of the debriefing and learning. Then, once you’ve slowly applied the pressure at the correct time, then you’re thinking: “Okay, and now how do I improve my processes?” How do I extract more from my good trades? How do I stop incurring so much damage from my bad trades for example? And this is not, again, an exercise where you’re just entering an excel sheet of the entry-exit size that you took, and so on, it’s much, much deeper than that. We talk a lot about this on the Axia trading floor. Where are the nuances in your trade and how are you placing these nuances? What sort of features were unique to that trade you saw, perhaps next time when you see a similar type of trade, you will take action with higher conviction.

#Lesson 4 – Denying Responsibility

So this trading mistake manifests itself in many, many different ways. But one of the most popular ones which we see repeatedly is blaming things on the algos, blaming things on the hfts, the stimulus, etc. This really comes from two things. One, you will actually notice that the less time someone has been actually trading, the more opinionated they are on this. The less time someone’s been trading, the more they’ll tell you. They’ll tell you order flow doesn’t work. They’ll tell you charts don’t work. They’ll tell you, you cant trade the news because of the algos and on and on and on. They’ll use this escape mechanism because they still don’t understand that because they expected they will trade markets for two weeks and do amazingly well from the beginning. And if they can’t get it, no one else can. So there must be some kind of catch, there must be some kind of thing that makes it impossible for anyone to trade. And they know it because they read some forum posts about someone or some tweet about some random stranger saying how it’s impossible because of the hfts, because they also can’t perform to a high level and they find some kind of mechanism to absorb responsibility. Now the big mistake for you is that you’re onto this. And then flying under the banner of new contract order flow because of the hfts you can’t trade well. And so really the mistake is understanding this kind of feature where so much of this conversation is made by other people who have traded for a very little amount of time or may have traded before and were successful and now are no longer successful. And you enter this fear too which is very difficult to resist and to be honest, you will not know any better either because you are just starting out too, trying to figure it out. This relates to mistake number 1: do not box yourself into this kind of negative thinking and this sort of mentality. So regardless of what’s going on, there will always be opportunities in the markets. You just have to be open-minded enough to shift your perspective and to take advantage of these market features and opportunities that will come. If your edge stops working, it is a normal part of trading and then it’s your responsibility to readapt, relearn and move on, instead of then absorbing responsibility saying, I can’t do this, and the market is rigged.

So again, it’s funny to see that many of the people who will give you these strong opinions probably have not been trading for very long. And as you go across the curve of people who are consistently profitable, who are career traders, who have been trading for very long time, you will notice the abundance of opportunity and how they’ve shifted their careers from trading one thing many years ago, and now are trading something completely different. And in the next five years, they’ll also probably have evolved their trading just suits the current market. And that is the story of everyone, especially all the senior and elite traders, here on the prop floor.
They can all attest to this, of how you have this constant evolution, and should not get dragged down by others with this sort of negative mentality or this way of denying responsibility.

#Lesson 5 – Not Intimately Understanding Your Tools And Markets

So mistake number five, it’s not understanding at a granular level, the tools you are using for the markets, you are trading. So, for example, there’s plenty of people who claim that they are order flow traders, yet, if you talk about using a footprint, if you talk about using certain things like the Delta, they ask you how this relates to that. They don’t intuitively understand how the price ladder mechanics work. And that’s because the questions they ask me in AMA if they truly understand price mechanics, they could intuitively figure out the answer to those questions. So it’s easy for me to pick out those who don’t understand that the moment they ask. Dynamics like passive vs aggressive bid/offer, absorption, various auction processes, what happens when someone has to liquidate, etc. How deeply you understand the dynamics of both the market auction mechanics and your specific market you are trying to trade.

And again. Do not insist on understanding just the price ladder intimately. Dig deeper. It is your duty to do this if this is your career to understand every single asset class closely as you expose yourself to those opportunities as early as possible because there are fantastic opportunities to be found. Yes, I’m looking at the price, standard profile, and many other things. But I’m also going to take the time to understand the derivatives I’m trading, what are actually futures in the first place? Why am I even trading futures? What’s the underlying market? How do bonds behave in certain market conditions, how do the equities behave, and so on. So again, it is making sure you don’t, in a way absorb responsibility as well by saying, “you know, this is too difficult for me to understand”. That is your duty to self-learn, self-educate. So the spectrum is broad, from footprint dynamics, price ladder to product understanding and fundamentals because you’re building a whole career for the rest of your life, ideally, into this field.

Closing Note

Treat yourself as a high-level athlete, you’re building yourself to have a high level of an athletic career, which is the best metaphor in trading, and while you’re building all these skills, you’re becoming a multi-dimensional trader. And that requires a lot of different skills that are completely different from each other. You are building this as time goes by because it is an investment into your future edge. You. It is a very difficult profession. And it is akin to something of a high caliber, professional, high caliber sport, which you know, to remind everyone, there is no amateur league in trading. You will be competing with everyone who intimately understands the price ladder, knows to the nth degree everything there is to know about asset class fundamentals in multiple different asset classes. You’ll be competing on the same level of stuff, in one arena. So for you to even have hope of reaching that kind of level, you have to be putting in the work early in your career, and hopefully by understanding these hard-earned lessons make a career in trading.

Thanks for reading this adjusted transcription of the 5 Lessons Beginner And Retail Traders Make and in case you would like to check each mistake in the video on its own, here is the breakdown:

00:00​ – 5 Trading Mistakes
00:28​ – Putting Yourself In A Box
04:10​ – Going Live Too Early
07:21​ – Not Having A Structured Learning Process
12:25​ – Denying Responsibility
17:25​ – Not Intimately Understanding Your Tools And Markets
22:59​ – Conclusion

If you liked this type of content, you might check these videos as well:

• The Biggest Mistake Traders Make With Market Delta – Footprint Chart Trading | Axia Futures
• Biggest Trading Loss lessons – Live Trading| Axia Futures
• Amateur Vs Professional Traders – Footprint Chart Trading | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Thanks for reading again and until next time, trade well.

JK

Should You Prevent Losses To Maximise Profits?

As it is easier to focus on not losing to maximise trading profit; one of the most commonly used strategies is to move your stop to scratch once the trade is on side. This makes sense, right? With a stop at scratch how can you possibly lose? Whilst this does serve to prevent losses, invert the idea and what it also does is prevent winners too: Any test back to your entry point gets you out thereby not maximising profit but in fact reducing profits. Lets take a look at this problem from a logical stand-point, next time you are in a trade (for this example, long) and your are about to move your stop to scratch ask yourself these 2 questions:

1. If it trades back to my entry point, am I wrong on the trade?
2. If I wasn’t in the trade would I sell there?

The answer to both questions, in most cases is going to be NO and so moving your stop to scratch doesn’t serve to maximise trading profits but in fact increases the chances of reducing them by making it more likely you will exit the trade with nothing despite never being shown you are wrong on the trade.

Why Scratching Trades Doesn’t Maximise Profits

There are certain situations where scratching a trade can help to maximise profits but these situations are few and far between. Take the example in the chart of Gold on 1st September 2020, below. The initial trade, indicated by blue text is a trade where a scratch after entry could be valid, however some key information had been gained by that point: From the entry point a target of a new high would be sought but when gold fails to break it’s hurdle to a move higher (blue line) twice an exit could be indicated, particularly when the drop back to scratch comes with higher volume and falling delta – both indications that sellers are in control at the point in time. In contrast the second trade (red text) is a prime example of where bringing a stop to scratch does the exact opposite of maximising profit: If the breakout short trade had been executed the bounce back to entry could in fact be an opportunity to add to a trade as it had not been proven wrong. Imagine you were not in the initial drop – would you be considering buying or selling that pull back? The answer shouldn’t change whether you have a position or not. This trade and one more were explained in the weekly mentored trading stream where members questions get answered. The video can be seen here

So the 1 simple way to maximise day trading profits is to ensure you are not scratching trades without due cause – a clear appreciation of risk is of course paramount and is a key element of our trader training courses, in particular our 8-week career trading course. All elements of risk management are crucial to maximising profit, reducing scratches is one element but the recognition that scratching a trade not only prevents losses but also prevents profits is an important adaptation of the phase “cut your losses and let your winners run”

Richard

Routines That Improve Trading Consistency Introduction

One of the ways how a trader can improve the edge is to build routines that improve trading consistency.  Simply turning at the right time and looking at charts is not enough. Especially if you are at the beginning of your trading journey. You need to build a replicable process that will over time ensure your consistency in analyzing the markets. This will bring more confidence to your trading, a higher degree of spotting the right opportunities that repeat over time, and fewer regrets of not missing opportunities so often due to repeatable process.

If you have not yet reached the level of consistency you wish for, continue to read since this can get your closer to your trading goals. Checkout the video below to get the maximum out of this article.

Why Are Trading Routines Important?

Apart from what was mentioned at the beginning of this article, the morning trading routine can also allow for:

• repeatable comparison of previous situations
• ensures full preparation with purpose – enables you to select correct strategies
• gives you a sense of calm and prevents you from rushing into things first thing in the morning when markets start to get active after the open
• maps your day in terms of timing and strategy

Questions are the answers. One thing to remember is that it always needs to serve the purpose of your specific needs. We can give you ideas on what questions to ask, but you need to think for yourself if these questions are helping your particular strategy. In this article, we will present sample questions presented in the video, and in the following article, we will have a look at questions I ask when doing my morning trading routine.

Top Down Approach

In order for us to build a robust morning trading routine, we want to look at markets from all possible angles. We will use a top-down approach going from two points of view (daily and market profile) to the lowest timeframe this trader uses for his execution. The Principle of “Top Down” approach is a good one to understand because it can help you build clues you need for executing your trading strategy. Also, this can be highly individual, since you might be executing your trades at different timeframes, but the top-down approach persists as a principle.

Daily – Context

Starting from Daily timeframe, we are trying to address these questions:

• Yesterday direction – Bullish / Bearish candle?
• Volume – Is Volume rising or falling?
• DSH/DSL (Daily Swing High/Low levels) – Are we hitting DSH/DSL and how it relates to Volume? Is Volume rising/falling while we are hitting it?
• Range – Are ranges rising or falling? Compare that to volume, DSH/DSL, and direction. Why? Maybe the market is trying to push one direction but the other side is happy to absorb the move. Or we are making new extremes, but volume is dropping. This gives us clues that we might be reaching a potential tipping point
• The current trend – what is the recent swing low to recent swing high direction?
• General direction – in general, is the market trending or balancing? Which direction?

Looking down at the chart below we can see, that the move on the very right has a current trend going up while the general direction is rangebound. As we are moving higher, the volume is dropping and we have just reached previous Daily Swing Low (DSL).

Market Profile – Structure & Context

Moving next to market profile, we want to get a sense of market structure and enrich our Daily context by asking:

• Day type – What was yesterday’s day type? This gives us clues about what kind of day we can possibly expect.
• Value Shift – was there a shift in value? This gives us a clue of how the market perceives the recent move. Was the move accepted by volume as well? If not, where was the market rejected?
• Extremes – how do extremes look like? Have we seen any major rejections and long tails created? Any poor lows/poor highs?
• L-I-S (Line In A Sand) – Where does direction change?
• In Control – Who is in control based on the information we have collected?

Now, let’s use the views in the questions above to form an opinion of the chart down below. After a trend day type, a L-I-S was created (low volume area) and value shifted higher. At this point, we believe the market might continue higher since based on what we have collected, buyers are in control. Great. Then the next day comes. We can treat this day as a balanced day with clear Tail at the highs. Now, this is tweaking our perception of the market a bit. Without this information, we would be much more bullish but now we can re-calibrate our view and wait for additional market generated information to form an objective opinion about where will the market head next.

Let’s move on to 60min and 5min timeframe to identify the access points.

60 Minutes – Tipping Points

This timeframe should offer more specific levels and plausible targets. Here are questions to address:

• Recent move – what have been the recent move?
• Levels – are there any significant levels within the scope of current range conditions?
• Market structure – does the current move have a good foundation?
• Is the market overstretched? – could this structure break?

We can see where the clear levels are. One is at the edge of the last breakout of the previous range, the other is the gap above. We can see clearly the trend day we have identified in market profile and balance days that followed with rejection at the top after we broke out of the range. Now it is time to move to the lowest timeframe to identify potential entry points.

5 Minutes – Entry Points

It is show-time now. Time to identify execution opportunities, time to pin-point entry points.

• Entry – Where can be trade entered?
• Trade expectation – how is the trade likely to play out? Where are Acceleration points or sticky areas, reaction levels for scalps after we enter the trade? Never expect a straight-line move from your entry towards your target.
• Delta – What did delta do? How does volume react? Is the velocity (speed, auctioning health) accelerating?

Now that you have all the information you can define your entry point. Interested in going short? What is delta doing? What will be the next area market will likely move to once you enter a trade? What are the roadblocks you might encounter?

Connecting all questions together that are consistently asked leads to repeatable trading ideas. Let’s summarise it.

Summary

Morning trading routines help improve your trading consistency. It is important to remember to ask the right questions, that fit your type of style and strategies you deploy in the markets. Keep the Top-down principle in mind when designing your morning trading routine. This article and video have provided you with a starting point but now it is up to you to really ask yourself what those questions you gonna ask day in day out gonna be. Also, don’t be afraid to change them over time. We are constantly developing as traders and something that served us well 6 months ago, might not serve us anymore now. That’s why reviewing your routines is also crucially important so you don’t do the things just for the sake of doing them :).

If you enjoyed this article you may consider taking our market profile trading course or viewing more trader training programs on offer. To learn how to trade and explore other great trading strategies, check out our futures trading course that teaches you exactly that and more. 

If you liked this type of content, you might check these videos as well:

• Trading Psychology: How To Develop the Skill of Consistency
• The 3 Step Journal Process Of An Order Flow Trader
• 10 Highly Effective Habits of Successful Traders

Thanks for reading and until next time, trade well.

JK

Learning to Trade Ideas From Other Traders

Learning someone else’s trade is the simplest way to find ideas – skip the ‘boring’ research, learn a trade, trade it, make money! The problem is that, even with the most well defined strategies, all that is learnt is the criteria to execute and not the mechanics of why it works or where the criteria comes from. Therefore it is almost impossible to recognise when a trade isn’t working until it starts costing money and even then the belief the strategy will start working again is hard to get away from.

Day Trading Futures With Your Own Ideas

Learning to trade your own ideas is the forgotten or dismissed part of trading; either because it is time consuming, less exciting or because of not knowing where to start. But the rewards are a full understanding of your trade, where it is best used, when you can trade bigger size and when it is showing signs of not working or need adapting.

• Breakout About to Fail
• Tactics to Trade Big Size

The key to developing new trade ideas is a clear process for doing so: gaining information, pattern matching, developing criteria, condensing to essential characteristics and then execution. Whilst this may seem initially overwhelming, anyone keeping a trade journal or consistent debrief is doing most of it. Gaining information is done by objectively noting down what has happened on the day – day type, where the market sped up or slowed down, technical patterns, current market direction. This is the kind of information taken in during morning preparation, by doing it in a debrief it allows the action to be reviewed and patterns to be more easily spotted and remembered leading to the ability to pattern match. Take the example below by noting down what happened and where a strategy can emerge to play a reversal when compared to similar type moves.

The key to developing a strategy is to compare similar patterns and extract the essential criteria: no continuation block after a steady drop, initiative out of the block, pull back and then drift higher. This allows criteria to be created to take the trade. The real learning to trade your trade comes in condensing the specific pieces of action you expect to see – this the part you can’t define when trading someone else’s trade. What exactly will get you in and what will enable you to have greater conviction on the trade? In the video below I explain one of the elements of entering the above ‘block reversal’ type trade, this detailed understanding of a trade is what enables conviction to be heightened and size to be increased.

Richard

P.S. Click here to read Part 5

Learning how to develop new trades via a well defined process is integral to your progress as a trader and for that reason it forms an essential part of our Career Training Course. To learn more about day trading futures you can browse our Trader ​Training courses and our flagship 8 Week Career Trading Course which can be attended live on our London Trading Floor or virtually from home as an online trading course.

The first key building block to developing one’s trading skill is being surrounded by successful traders on a trading floor whilst immersing yourself in an informational ecosystem that is rich with an opportunity spectrum of approaches and proven edges. It then requires an open mental faculty of digesting and filtering through the key informational flows from such a trading floor. However a trading floor that is successful but without a voice is like Lewis Hamilton teaching a teenager to drive blindfolded. No matter the talent of any instructor, if one cannot see or hear their teachings then there is little room to learn from anyone with a track record of success.

Your learning progress is accelerated when a trading floor has a healthy voice and the source of its voice is the product of consistent and routined success. Being on a trading floor with such a voice that is conversational in respect of real time market-action, made up by multiple successful traders, has an exponential effect on the learning process of a developing trader. Being governed by a variety of specialised market opinions, voiced in real time, provides many varied angles of attack and ways of interpreting and understanding the underlying market mechanics being witnessed in each moment.

This running commentary, especially when markets awaken with systemic volatility or when a specific market enters new price territory and brings in a wave of market participants creating new auctioning flows, can provide the right fertiliser for a developing trader. It stimulates curiosity when one is surrounded by senior, profitable traders who focus their attention in a certain area or dynamic zone and creates a full sensory learning experience in how they interpret and react to new market information. Being exposed to this quality of focused attention with live vocal commentary by a successful trading floor is pure learning gold for any junior trader.

The key, if you want to build habits that last, is to join a group where the desired behavior is the normal behavior.

James Clear

Trading Floor learning dynamics

Beginners Mindset on a Trading Floor

However it requires a beginner’s mindset, a solid questioning framework and self awareness to fully exploit one’s learning in such a dynamic environment. This is especially true in an environment that commonly has extremely strong characters. Without enough self awareness, you can fall subservient to every mouse click you hear on the floor as your identity is slowly hijacked. In such an environment it is important how you choose to listen to the trading floor and not merely act upon what you hear. Rather, you should listen, digest and assimilate the rationale for the ideas that are reverberating around the trading room. It is this synthesizing process that is the first port of call for one’s own rapid progression. You can see many examples of how one of our Elite Traders rapidly processes information on our YouTube channel or in this previous post on how he traded China Trade Wars.

Consolidating Your Trading Floor Experience

At the end of day is then critical to journal and consolidate your experience so that you do not lose the lessons you have gained on the floor. By consciously recording your experience and observations you will embed the many subconscious patterns and cues into your psyche. Neglecting to do this often makes the developemental journey even longer especially if your goal is to cultivate your own skills of unconscious pattern recognition.

As the processing capacity of the mind to train your skills of pattern recognition is most fertile at the end of your session, this is when one’s experience needs to be harvested to the maximum degree, otherwise a day loaded with powerful ammunition for learning is simply wasted. At Axia Futures, we call this your end of day debrief of deliberate focused attention and meditative assimilation in order to develop core recall skills. This is a major topic with multiple approaches that we unpack in-depth on our 8 week career trading course.

Removing Your Trading Floor Input

As a group of high performing traders, our primal instincts are to benchmark best practices and ignite healthy competitive spirit within the team. To continue growing as a group and to do this on a mass scale, we continually need to ensure that individuals are surrounded by top performers, as this is what drives us to higher levels of performance. Exposure to constant daily informational inputs from the trading floor uncovers many blindspots that each individual may have not noticed in their trading day. As Axia Futures, this may have dovetailed into our EDGE Zone sweetspot.

I have seen many traders in my 16 year career who were incredibly successful on the trading floor that then left for “greener pastures”. In many instance they predomantely trade on thier own and slowly slip down in P&L over a few years and never exceed their previous performance levels. Whilst the individuals in the group continue to grow, the individuals who leave become lone wolves and inevitably plateau in their P&L curve.

From developing on a trading floor to later going solo, you effectively remove the key inputs that initially helped you to build a sense for the market. This was informed by the energy on the trading floor which acted as a barometer for energy within the market. Therefore, I always say to our traders who are keen on growing to keep on doubling down on what you doing well and maintain the habits and environmental design that has led to your current success.

• Take a look at our training if you wish to develop your trading career
• How to build your footprint chart on Sierra
• Join our daily livestreams direct from our trading floor

The London Trading Floor Live Stream

If you are unable to join a trading floor but wish to get the next best thing, check out our daily live streams from our London Trading Floor or learn to trade with a range of our Trader ​Training courses on offer. The Axia Futures 8 Week Career Programme can be attended in-house or virtually from home as an online trading course. These are the most comprehensive training programmes in the world of proprietary trading​ and are based​ ​upon years of successful in-house skill​s ​development​.

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Where to Place a Stop

The simplest answer to this question is: where you are wrong! This should be a guiding principal when considering not just a stop but also where you enter a trade – if where you are wrong is more risk than you are willing to take on a trade then taking the trade has to questioned. So, how do you decide where you are wrong? This all comes down to the trade you are trying to execute. In the image below we have an expected move through the large range (boxed on the right) and two different ways to enter the trade each with it own stop placement.

In the blue trade when a short position is entered mid-range the market has not yet confirmed that a move down is happening and so it could continue to move within range without showing that the position is wrong and would suggest a stop placed above the high of the range. Whereas, in the red trade, a short is entered after the break of the current day’s low, if this expected move is to play out, the market is unlikely to move back above aforementioned lows and so allows a tighter stop. Each trade has its own skill set you would need to learn to trade the set up – Blue requires a willing to sit through uncertainty and have a strong grasp of technical analysis; Red requires the ability identify momentum and execute based on order flow.

Should I Move My Stop to Scratch?

This is a very common question, along with when can I move my stop to scratch? that I receive during our Career Trading Course as well as from traders that I mentor. It is a rare occasion that a stop can be moved to scratch/break-even; the motivation to do so is based on trying to protect profit and not take a loss after having been on side, it fact often what it serves to do is limit profit when you are right whilst not doing anything to protect you when you are wrong. Meaning that over time many trades that could be a winner are cut at precisely the worst point. Take for example the trade below which was discussed in the Daily Debrief. The aim of the trade was that whilst above the open (blue line) then a move to yesterday’s value are high was on – entering on a pull back with stop below the open would be the initial trade plan but having gone on side many trade will want to ‘protect’ themselves by bring in the stop to scratch – this gets you out of the trade with out being proved wrong but arguably more damaging is fact that talking a scratch has guaranteed not taking any potential profit.

Day Trading is About Probabilities

The desire to take a trade is sometimes overwhelming and so an entry is taken without full consideration for the stop, this then leads to protective stop placement rather than where a trade is wrong, below is a perfect example, kindly donated by a trader I mentor. Having missed the original entry following the move higher, illustrated above, this trader then jumped into a short and having realised they didn’t want to take a stop above the high they put in a ‘tight’ stop of 3 ticks to protect themselves. The problem here is that by not having a stop where the trade loses the probability of going (above the high) you have a higher chance of the stop getting hit, so whilst it may feel like only taking a small loss, the probability of taking that loss is high. Contrast with a larger loss but a low probability of taking mean that over time the larger loss may well to be the favorable choice.

We will visit probability in a future blog but for now consider where you are wrong when placing a stop and how this affect the trade you are about to take.

Richard

P.S. Click here for Part 3

Learn To Trade Futures

For more information to learn to trade futures and develop your career as an elite trader then check out our range of Trader ​Training courses on offer. Our flagship 8 Week Career Programme can be attended live on our London Trading Floor or virtually from home as an online trading course. These are the most comprehensive training programmes in the world of proprietary​ ​futures​ ​trading and are based​ ​upon years of successful in-house skill​s ​development​.