 Hey guys, this is Hydra from Xtrades and today I'm gonna be going over Basic principles to be a successful trader in terms of trading psychology so The first point is that you don't you really don't need to know what is gonna happen in the markets to make money, right? You don't have to predict stuff to make money In fact, if you're predicting stuff, there's a good chance. You're most likely just gambling You can ask the best traders in the entire world and they'll tell you that they have They truly have no idea what's gonna happen in the markets next and the only thing that they focus on is probabilities, right? the market itself is really one big probability game and To be a profitable trader, you need to have a specific edge in the market and by that I mean you need to have a specific setup where you know exactly How many times it works and what the average risk-reward ratio is when it works or when it doesn't work, right? So for example, let's say you have Let's say you have a set up, right? Let's say this is a bull flag set up and this is the only thing that you trade And let's say that you are correct 50% of the time So every time you take this trade on average, you're around or you're this trade ends up working out 50% of the times and on average You're every time this is right. You're making two dollars and every time you're wrong. Let's say you're losing one dollar So your risk-reward ratio is one to two dollars, right? Every time you're right, you're making two every time you're wrong You're losing one and you're right about 50% of the time So this is all you need to be a profitable trader, right? You need to you need to find a specific edge and by edge I just mean a specific setup that you trade over and over again so in this example, I chose a bull flag, but it can be whatever that you trade and A good way to think about it is it's like a coin flip, right? Let's say there's let's say there's a 50% chance for your heads and tails for every coin flip But let's say every time it lands on heads You make two dollars every time it lands on tails. You lose one dollar, right? So once you want to flip that coin again and again and again That's all training really is it's about finding a specific edge and just repeating that one set up again and again and again and Yeah, so next point a profitable trade doesn't mean it was a good trade So if you're following your plan, then it's a good trade. If you're not following your plan. It's a bad trade That's all really that's all that really matters. So Let's say So let's say the stocks of five dollars you buy you buy the stock your stop-loss is at 450 the stock dips below 450, but You're hoping that it reverses so you decide not to take this You decide to remove the stop-loss and not follow your plan, right? Let's say the stock ends up going all the way down to four dollars, but it ends up reversing and then you actually end up This trade actually ends up becoming profitable and you sell it at like 515 So you end up making a small profit. It's just a good or bad trade Even though trade even though the trade was profitable. This was definitely a bad trade, right? because let's say Let's say this time it worked out, but next time this the stock could tank completely, right? it goes all the way down to two dollars now you have a big loss, right and Rule number one avoid big losses in the markets, right? You want to there's only four things that can happen with every single trade and the four things are a big win a big loss as just Size loss, right? These are the four things that can happen in the market If you're following a stop-loss and you're automatically eliminating a big loss, right? And now these are your only three options that these are the only three things that can happen in the market And that's exactly what profitable traders have. You can only have a big win a normal win or a normal loss normal loss, so Making sure that you're following your stop-loss is extremely important and if you're if you're not following your stop-loss, you're essentially just gambling and that's not something that you want to do and Yeah, that brings me to the third point. So a loss doesn't mean it was a bad trade So as long as you're following your plan, that's fine And you always have to think in probabilities, right? Anything can happen in the markets So just because you have a profitable setup doesn't mean it's gonna work every single time. In fact, most people Their winners are actually pretty low They can go down to as low as like 40% but they're profitable because they have a good risk reward ratio Every time they're right, they're making $3 and every time they're wrong, they're only losing $1, right? And you can have a win rate of like 40% and still be profitable And some traders have a super high one, right? So let's say like on 80% but they're risking $5 to make $1, right? So even though you have a high win rate, your risk reward ratio is very bad So this is not a profitable System so you always want to look to have the key is in the risk reward ratio, right? You want to have a high you want to be making a multiple on your risk for every single trade but most people pay attention to one rate, which is which is not as important and Yes, so the next point you have to be very disciplined and very focused, right? So most people that one bad trade get to them and that's gonna like that Deviates them from their entire process and they just don't follow their plan anymore And things just get out of hand and then one losing position turns into a big loss and then yeah They they end up blowing up their accounts and so yeah The key is to always we always be disciplined, right? Always follow your plan no matter what no matter Even if you're not even if you're on a losing streak Many traders get frustrated, right? And they end up just saying not this one. This one's gonna reverse for sure but yeah, you always want to avoid that mindset and if you're in that mindset, you just need to size down or maybe take a break and Just get back into the market when you're back in sync with the markets, right? the average trader has like an unhealthy mindset and He wants to be all he he or she wants to be right every single time, right? He puts too much he or she puts too much pressure on themselves to be right about the trades Which leads them to holding on to losing positions and taking profits way too early off owners And yeah, ultimately this just leads to more losses than wins and this is what leads to Traders blowing up over time. So again, just to reiterate you have to be very disciplined and focused This is what causes 90% of the traders not to make it. Everyone knows what setups are, right? Everyone knows what bull flags are or at least a good amount of people and Many people know how to follow their stop-loss plan, but most people can't do that consistently most people let bad this bad trading periods get to them and Yeah, you just have to make sure that You just have to make sure you're mentally in the right state at all times And when you're not you just have to step away from the market and realign yourself when you're Back to trading at your best. So yeah, the these are like major principles for training psychology and I think They're very very very important for beginner traders. But yeah, that's pretty much it for all Yeah, that's pretty much it for this video and thank you guys so much for listening and yeah, thank you You