Lesson Learned: What Seperates the Greats from the Ameteurs

I am getting back to trading again after several years of unprofitability. I went over my trade entries from many years ago, as well as entries I backtested, now that trading view seems to have improved it's bar replay, it's been even easier.

I made a discovery:
1. High R/R as well as moves with possible multiple entry opportunities are found on the 1hr or higher timeframe breakout structures.

2. The losses I had taken came from trading breakouts within a consolidating market.

3. Winners start working rather quickly, they go move big and fast. When checking my trade duration, the losses tend to happen either very fast, or they linger for a bit, then hit my SL. or perhaps a small profit. Winners tend to have very fast(especially since I daytrade the 5min).


This was a great observation, as last night, I got to see it in action again, using live money and real emotions.

Now I can see what I do so I can learn.

Lessons Learned:

1. Trade Only 1hr or higher timeframe breakout structures. It's fine to take a 5min breakout within to catch the full breakout(as you would take a 1hr structure to catch a Daily chart breakout), however, step back if market is hostile.

This allows for:
Optimal R/R due to a bigger trending move
Higher win rate due to cutting out losses from random price breakouts due to using only the 5min chart patterns.
Patience to wait for the bigger trend to break out, when the market moves and can actually provide a good trading environment.

2. Avoid Hostile Markets. mentioned on lesson 1, but is worth reemphasizing. Continuing to reenter a market that is clearly moving unfavorably to your plan is death by 1,000 papercuts.
Rather than continuing to try to get in, which is absolutely fine in a favorable market, use your "sit-out power" - The discipline to stay out of the market when conditions dont suit your strategy. By sitting out during unfavorable periods, top traders like Mark Minervini(U.S. Investing Championship 1st place winner on multiple years with multiple students also reaching top ranks) maintains a win rate closer to 50%.

3. If market takes too long to go, it could be a sign that it is not ready yet and may most likely continue correcting . This is clearly evident in how the market today, although it seemed to be forming double tops, and breakout structures, it didnt breakout yet, it just extended it's correction, making this move unpredictable, and raising the chances of stopping out. Trading is probabilities, and successful trading is moving the probabilities in your favor. This may be an opportunity to revisit during more favorable market conditions, when it begins to trend.

I used a time stop today, and it is something that I have recently started implementing, as I also discovered that many successful traders also use a time stop, because timing the market breakout is a key element in trading the market profitably, as well as is staying out when the timing is off and avoiding a full unnecessary loss when markets are moving unfavorably for a long period.


A tweet I read today, published by Law Wai-Sum, known on X as JLawStock, One of Mark Minervini's student's, and also 1st place winner of the Eleven Month 2024 U.S. Investing Championship with a 308.6% return in the Money Manager Verified Rating($1 Million+ Accounts), yesterday, mentioned "to improve trading performance, the first step is not to seek trading opportunities but to learn how to eliminate them...Currently, the U.S. Stock market is also not the time for me to engage in agressive trading. I have given up on many trading opportunities, but this is cautious timing approach allowed my overall account to achieve double digit growth last december with minimal drawdowns.

The second step is to learn to focus on opportunities that truly belong to you.

How many times in the past have you kept firing away, only to end up busy for nothing and making no progress? This shows that the majority of trades are, in fact, meaningless. The major contributions to your account often come from a few key trades. But one thing is for certain: These key trades do not present entry opportunities every day- they only appear at the most favorable moments, and when they do, that's when you grab the money in large handfuls..."

This was so special for me to read precisely today, as I took losses for trading an unfavorable market, and now, hours later, I see, the market was not breaking out. Jesse Livermore, or JLaw himself couldve been trying to trade these breakouts and they wont go. The key is, they wouldn't continue trading these breakouts. they dont get results from the markets because the market just move in their favor, rather, they decide to keep their profits by staying out when it does not.


I invite you, as a reader, to take action on the knoweledge learned, and observe your past trades. zoom out, were you taking losses due to trading a hostile and corrective market?
Rather than switch and learn new strategies(As I once did, which was fine too, as it was great knoweledge, but I go back to the basics, what I started with, because it works, it always did, I just needed to do a better job of understanding when it worked and when I was overtrading), I challenge you too, to develop further YOUR strategy. To understand when to stay out and sit in cash.