This is Al Brooks, and this is Module 4 of my Price Action Trading course, and

today I'm going to talk about the personality traits of successful traders.
Everyone's familiar with the list of traits. There are many more than this. Some
are fairly obvious, being objective, being disciplined, being patient. The two
last ones, I think, are probably the most important, being comfortable with
uncertainty and managing trades properly. Disciplined traders, they never say to
themselves, maybe this time it'll work, I'll try it this time, or hey, maybe I'll
try this. They don't try ideas out of the blue, whimsically, just because the
market is setting up something that might be fun to try. They stick to their plan
and if a setup is not one that they normally trade, or if it's something that
doesn't look quite right, they just don't take the trade. They just let it go.
Disciplined traders, they never say to themselves, maybe this time it'll work, I'll
try it this time, or hey, maybe I'll try this. They don't try ideas out of the
blue, whimsically, just because the market is setting up something that might be
fun to try. They stick to their plan and if a setup is not one that they normally
trade, or if it's something that doesn't look quite right, they just don't take
the trade. They just let it go. And you're trading against computers and you're
trying to duplicate what they're doing. Institutions are mostly computer generated
trades. And for you to make money, you've got to be doing what the institutions
are doing and what the computers are doing, and they're not trading based on
emotion. So if you're looking at a setup and you feel any emotion, don't take the
trade. You also have to be very comfortable with the idea that the market might do
the exact opposite of what you believe, and it'll happen about 40% of the time. It
can happen more. If you're a scalper and you're extremely good, it can happen
less. But you have to be open to the possibility that the market can do the exact
opposite of what you think. Remember that any time you take a trade, an
institution agrees with you and another institution disagrees with you, and you
cannot be so confident that the institution on the other side is wrong. That
institution, no matter how confident you are, is going to be right 40% of the time,
at least 40% of the time. So if you're a pretty good trader, you'll probably lose
at least 40% of the time. You have to be willing to sit there and do nothing. If
you're a day trader, sometimes you have to sit for an hour or two or three waiting
for a good signal, and never get impatient and start telling yourself that, boy, a
good trade is overdue. Maybe I'll take this one. A good trade is never overdue.
Sometimes there'll be 20 or 30 good signals in a day, sometimes just 3 or 4. And
if you want to end up positive at the end of the day, you'll just accept whatever
the market is offering, and if it's offering very little, then you have to sit
there patiently and do nothing. This is very important, the idea of being
comfortable with uncertainty. Whenever you're putting on a trade, there's always
uncertainty. The first obvious element of uncertainty is how likely will the trade
be successful. What's the probability of success of achieving your goals? And then
you're also going to be uncertain about where to put the stop. Do you use your
routine stop, money stop, like maybe 2 points in the E-mini, maybe 50 cents in IBM?
Or do you have to use a bigger stop or a smaller stop? You're also going to be
uncertain about your profit target. If the bars are very big and the range is very
big and the swings are very big, maybe you should be using larger targets. And
this is something that traders deal with all the time. And if you find yourself
getting upset or anxious or feeling pressured that you don't have enough time to
make the decision, don't take the trade, right? Because then you're feeling
emotion and you cannot make money if emotion is influencing your decisions because
you're trying to do what the computers are doing and they are not trading based on
emotion. You have to be comfortable with losses. They're going to come. If you're
a pretty good trader, you're going to be losing at least 40% of the time. When
you're trading, nothing is crystal clear as you're trading. And if you think
something is crystal clear, don't take the trade because you're reading the charts
incorrectly. At the end of the day, when you print out the chart, everything is
crystal clear. However, that's not the case in real time. There's always
uncertainty. You also have to be comfortable with what you're doing. If this is
your job and you're planning on doing it for many years, you have to be doing it
in a way that's enjoyable. You can't be miserably stressed out all day long,
worried about losing money, and worried that, oh my gosh, I just lost three in a
row. I can't afford losing four in a row. If that's how you're feeling, you have
to change how you're trading and find a method to trade where you enjoy what
you're doing. I get up every morning and I just can't wait to get in front of my
computer. I really like what I'm doing. For years, I was an extreme scalper,
taking 40 trades a day. But it was really stressful. It was not fun. Can you make
more money doing that? Sure. But life has to be fun. You only have so many years.
If you're choosing to live them in a miserable way, I think that's not the best
way to live your life. What you do with your life, time is precious. Every part of
your life should be fun. You can make money while being happy. There are lots of
jobs where you can really love what you're doing and you can make a lot of money.
Trading is one of them. You don't have to be miserably worried all the time. You
have to find a way of trading that allows you to be happy. There are lots of ways
to trade and chances are you'll be able to find one that suits your personality.
Don't worry if you see someone on television who's trading one way and it's not
right for you. That's okay. Every trader has a different personality and every
trader finds a method of trading that suits their personality. The great traders
don't worry that somebody else is using some other approach and making a lot of
money. If that's not them, they don't worry about it. You have to be comfortable
doing what you have to do. Swing traders, they lose most of the time, but they're
going for rewards that are two or three times greater than their risk. If they're
comfortable with winning only 40% of the time, it's a great way to trade. In fact,
it's probably the best way to trade when a trader is starting out. Other traders
are comfortable scaling into trades and going against them. For example, if the
market is in a weak bull channel, they'll start selling above prior swing highs if
they're confident that the channel is about to transform into a trading range or a
reversal. But they have to be comfortable with growing open losses. The losses
that they have continue to grow as the channel continues to go up. They also have
to be confident in their read. They have to be confident that the channel is trying
to convert into a trading range. They also have to be able to stick to their plan.
They can't panic and exit with a huge loss right before the market turns. They
have to be trading with a size that will allow them to have the market go against
them, sometimes for an hour or two. But as long as they're confident with their
read and they're not trading so large that the losses are too big for what they're
doing, that's a comfortable way to trade. There are other traders, scalpers, who
want a very high probability trade. But anytime something has a high probability
of working, chances are it's only going to work briefly, so the reward is going to
be smaller. However, even if you're scalping for a small reward, you have to make
sure that your risk, the distance to your stop, is no bigger than your reward. If
you're trading with a stop that's bigger than your profit target, you have to be
right 80 or 90% of the time, and that's very difficult to do. Some traders are
comfortable with any type of environment. High probability, low probability,
scalps and swings. And that's okay. And if you find yourself to be one of those
traders, go for it. If that's your comfort zone, that's fine. Go for it. Trading
trades correctly is, I think, the most important part of trading. And it's more
important than spotting perfect setups. It's fairly easy to spot setups. It's
fairly easy to spot really good setups. But it can be difficult to manage the
trade correctly after you put the trade on. Most of the time, there's a profitable
way to manage both a long and a short. So most of the time, at any given instant
during the day, you could buy and make money. You can sell and make money if you
manage your trades correctly. How can that be? Well, let's say you buy. There's an
institution taking the other side of that trade, and chances are they're
profitable. So they have a profitable way to make money selling to you. But that's
management, and you have to be able to do it well. So anyway, like I just said, at
any given instant, a good trader usually can make money by either buying or
selling if they manage their trades correctly. This is the end of module 4. Thank
you.