Lessons from My Trading Teachers

CryptoCred
Jan 27 · 18 min read

Note:

This is a lot longer than I expected!

I’ll likely make it a 2/3-part series.

This first article mostly just identifies my trading teachers and talks about what I have picked up from each one.

I am going to try to make this a more free-flowing piece of prose compared to some of my more mechanical articles.

Image courtesy of teachermagazine.com.au

My aims are as follows:

  1. Describe what I think mentorship is when it comes to trading and discuss whether it is a misnomer in my case.
  2. Identify my personal trading teachers (hint hint, it’s a misnomer).
  3. Discuss exactly what resonates with me from each teacher.

Section 1: Do I Even Have Any Trading Mentors?

I think the answer is ‘no’.

Learning to trade from someone’s content is not the same as them mentoring you.

I personally believe mentorship requires the mentor to vest their resources (time, effort, and sometimes even money) into their students. There needs to be some element of personal investment and bespoke guidance.

Personal contact was very limited (virtually entirely absent) between my teachers and I.

Closest thing was spamming @Trader1sz via DMs for a couple of weeks before I knuckled down and started through crunching through his videos instead.

It seems with the amount of resources available on a platter, the art of self-study is dying out.

I fondly remember (after watching 1–2 of @Trader_Dante’s YouTube videos) I went back through dozens and dozens of his Tweets from years ago and marked up the levels he Tweeted out on my own charts to better understand his method.

How many people still do stuff like that?

Nowadays it seems that new traders just want a single, simple, demonstrably profitable trading system laid out in a neat PDF that they can read in 5 minutes which will leave them ready to attack the markets the next day with a perfect win rate.

Long story short: I had virtually no direct or 1:1 contact with my teachers. I learned via their content and had to make sense of it myself, for the most part.

Section 2: My Trading Teachers

In the order that I discovered their content:

  1. Tom Dante
  2. TraderSZ
  3. Inner Circle Trader (“ICT”)
  4. Will Hunting (wmd4x)
  5. Simon Kloot

I’ll save you the history, because I know most of you just want to read the section on what I learnt from each one!

Section 3: Lessons Learnt

Before I dive into the details, I’d like to make one thing clear.

There’s an expectation — not necessarily an unreasonable one when only starting out — that when one finds a trading educator one must go down the route of imitation and try to trade exactly like them.

Additionally, some mentors relish this idea because it adds an air of exclusivity and makes for an effective marketing angle (“my material isn’t like anybody else’s/never before seen/only works as one cohesive system” et cetera).

I don’t think this is a fruitful path for the overwhelming majority of developing traders.

First, there’s a good chance that a large portion of an educator’s trading choices (style, time frames, tools, and so on) are linked to their personal preferences. Simply, your personal preferences may not align. It’s quite unlikely that the first trading educator you come across whose material you enjoy is a carbon copy of your personality. Thus, it is submitted that one needn’t limit oneself to every single one of an educator’s principles in a hard line or absolutist manner.

Second, it’s very likely that the trading educator themselves had several trading influences. In my experience the best traders that I’ve come across have a “Frankenstein” trading system i.e. they learned a lot of trading techniques from eclectic sources and ultimately refined that body of knowledge to make it their own.

In summary: be open-minded, adopt and adapt what works and resonates with you, discard what doesn’t.

What follows is the detailed breakdown in the order that I discovered their content.

Tom Dante

@Trader_Dante

The first thing that really resonated with me was the idea of support and resistance.

It may sound trivial, but my background before finding Tom’s content was pattern trading on crypto Twitter and Ichimoku Clouds.

My personality is naturally drawn to things that can be explained quite simply and in a logical manner. Support and resistance as a concept makes sense, and I’ve stuck with it ever since. It’s the foundation for almost all of the entry structures and techniques I use, and it keeps me grounded when I start to complicate matters needlessly. Broken support becomes resistance/broken resistance becomes support. Most entry techniques can be adequately explained using this simple premise.

It was also reassuring to see that experienced traders and professionals still use the basics, and there’s no hidden magical tools (I think!).

The idea of horizontal support/resistance levels immediately appealed to me.

Again, this is in part influenced by my background: I was seeing a bunch of very arbitrarily-drawn/curve-fitting patterns and trendlines and could not replicate them for the life of me. That is not to say that horizontal lines aren’t subjective, but I certainly saw the appeal in tying my support/resistance structures to specific price levels, as opposed to trendlines that I felt were ‘in the air’ and constantly adjusting, so to speak.

Tom Dante’s webinar on order flow really made that topic very clear and accessible to me.

The idea of probable areas of liquidity, traders using certain price swings for their stop losses and limit orders, how bigger traders can take advantage of that fact, traders being forced to make a decision, and so on form a conceptual framework that both informs my stop placement as well as certain entry techniques that I employ.

If you keep seeing terms like liquidity raids/liquidity pools/stop runs/stops taken, and so on, I heartily recommend you purchase and watch Tom’s webinar on the matter.

The idea of FTA (“First Trouble Area”) I learned from Tom Dante and it is my primary tool for ascertaining one of the hardest variables in trading: when to exit.

Profit-taking is, in my opinion, one of the more diverse topics when it comes to trading.

Measured moves, Fibonacci retracement/extension levels, trailing stops, indicator-based signals, and so on are just a few of the examples that come to mind.

I would constantly struggle with trades where price would move nicely from my entry, but start turning around much earlier than my take profit order. Match that with poor trade management skills, and I was leaving a lot of money on the table.

Moreover, FTA appeals to me logically. Unless I have some reason to think otherwise based on a higher time frame or a directional bias, I simply don’t know whether the first area of resistance my long reaches will roll over/the first area of support my short reaches will roll over. So why not exit there and not assume that support/resistance will break just because I’m in a trade? Additionally, if the level does roll over, although I am out of the trade I can still use the same level should price return to it.

In short, the idea of FTA has given me a logical, replicable, and conservative way to approach profit-taking in my trading.

Last but by no means least, Tom Dante firmly instilled in me the idea that trading is difficult and ought to be taken very seriously.

This was in sharp contrast to my trading surroundings (crypto 2017 bull market) where there was no need to take trading seriously. You could take punts on an altcoin, make money, take profits, and find another one.

The market conditions themselves made it easy to ignore being systematic and conservative. Every fool was making money, so why be careful?

Things are obviously quite different now, and have always been different in FX.

‘Taking trading seriously’ contains within it various subcategories. Having a healthy and sustainable daily routine. Being disciplined with one’s trading journal. Rigorous data collection and generation of new ideas. Objective self-reflection. The list goes on.

If you want to make trading your profession, your attitude and behaviour should reflect that.

A valuable and timeless lesson.

TraderSZ

@Trader1sz

The first and most valuable thing I learned from SZ is that as long as you know where you’re wrong (stop loss) and what price is likely to reach for (target), your actual entry doesn’t need to be precise down to the pip.

This is something I struggled with a lot starting out. I would have a good idea of where the market wants to go, I would have a good idea of where it shouldn’t go if I’m right, but I constantly missed trades because I was worried about precision/price having to bounce exactly from one of my levels.

Fixation on precision over general direction and risk definition is a sure way for a developing trader to hinder their progress.

It’s worth mentioning that this concept really clicked for me when I watched SZ do it in his live trading room, over and over again week after week.

For example, price would break down and start retracing to a level of prior support (turned resistance). I was expecting him to leave a limit order at the level itself, so I was surprised to see him hit the sell at market before price had even pulled back to the level. I asked why, and he simply explained that he sees what he needs to see to step in, he has a clear invalidation and target, and that retrace offered suitable R:R for him to take the trade.

This is not to say one shouldn’t be concerned with being precise with one’s entries. Nice entries are much easier to manage, among other things. The real benefit here is that if you have a good idea of what’s going to happen, you can still get in the trade while everyone else waits for a certain level/structure to be (re)tested and are left pissing in the wind, especially if a market is moving with a lot of momentum.

In summary, focusing on direction and invalidation as opposed to sweating over my exact entry has offered me plenty of trade opportunities that I would have otherwise missed.

I learnt from SZ that just because the price action around a level isn’t clean doesn’t mean you can’t trade it.

This idea of a deviation/false break (that’s all over crypto Twitter now) has changed the way I look at support/resistance levels and is the basis behind a couple of the entry techniques that I employ.

Price isn’t always going to behave in an easy-to-read textbook manner where every support level neatly flips to resistance, every broken level is neatly retested and leads to continuation, and so on and so forth.

I used to think that if I had a support level drawn and price broke through it and then back above it, that meant that the level was ‘washed’ and of no further use. Now I recognise (and you can explore this yourself as well) that such price behaviour is often a false break to get everyone bearish/shorting the retest before reclaiming the level and trading higher.

The same principles applies to trendlines, ranges, and plenty of other structures.

In essence, SZ brought actionable clarity to price structures that I thought were washed and not fit for trading.

SZ was the first trading educator I came across that had a replicable and clear definition of the term ‘confirmation’.

‘Confirmation’ is a frustrating term.

It’s mostly used by social media traders who want to ‘hedge’ their calls: they’ll say they will enter a trade if it gives ‘confirmation’, but never bother defining what that means or what it looks like on a price chart. The result: if the trade goes well they’ll say they (miraculously) entered on confirmation and made money, if it doesn’t go well they’ll praise their trading system that didn’t give them confirmation and thus protected their capital.

SZ makes this slippery idea very clear. If price comes into resistance, confirmation that the resistance will likely hold is given if price makes a lower low. At that point, rallies are for selling. If price comes into support, confirmation that the support will likely hold is given if price makes a higher high. At that point, dips are for buying.

Beautifully simple.

Inner Circle Trader (“ICT”)

@I_Am_ICT

Most people (understandably) focus on ICT’s lessons on price action, but I think his lessons on risk management don’t get anywhere near the attention they deserve and they heavily influenced my risk management framework.

Knowing how to manage risk (set a stop, risk a certain percentage of one’s account, using leverage, and so on) is not the same as having a risk management framework (how much to risk, when to increase/decrease that amount, dealing with drawdown, and so on).

To this day I use (a slight variant of) the model ICT outlined in his ForeXmas Risk Management video whereby I reduce my risk if I’m eating consecutive losers. I also normally risk a flat 2% per trade save exceptional circumstances.

These two things have saved my arse when I have traded market conditions that slapped me about, and I’d be a lot worse off had I kept risking a flat 2% despite hitting a wall.

ICT’s risk management material is logical, reasonable, and conservative — it works.

ICT’s videos on market structure made that topic exceptionally clear to me and I use those teachings to form both my intraday and higher time frame bias.

Most trading educators will teach variant of market structure. ICT’s approach really helped me contextualise how I should be viewing dips and rallies in price.

If price rallies/drops, I no longer feel the need to chase it or feel that I immediately have to fade it. I don’t have to guess.

If the context is a bullish break in market structure, I can calmly sit back and wait to be a buyer of dips. If the context is a rally after a bearish break in market structure, I can step in front of it and sell with confidence without wondering whether I should be chasing to buy.

The above is a gross oversimplification, but in essence, understanding market structure has allowed me to be much more anticipatory in my trading as opposed to chasing price with the herd.

Add to this the idea of Optimal Trade Entry (“OTE”) which has confluence with a support/resistance structure or orderblock or whatever you use, and you have yourself a high probability setup.

In essence, ICT’s material has helped me develop a much more anticipatory trading style, and that has both greatly reduced stress (FOMO, feeling upset for ‘missing’ big moves, chasing price, and so on) and helped me develop a system that works for me.

Another valuable lesson, or perhaps two lessons that complement one another, is taking a sniper-like approach to high probability setups.

Whether you subscribe to IPDA or not, it’s quite clear that price will often behave in the same way/form the same structures over and over again and do so on various time frames.

As a result, it’s possible to clearly outline in advance what to look for in price before taking a trade. A fortiori, it only takes a couple of excellent setups per week/month to build the foundation of a good trading career.

Those excellent setups are worth waiting for.

I used to stare at charts all the time, and when the market moved and I wasn’t in the trade I would lament the ‘missed opportunity’ and would think that missing the move made be a bad trader and a worse analyst.

The ‘sniper’ approach of waiting for high probability setups that are a) easily identifiable, b) replicable, and c) premised on higher time frames, did wonders for my trading account.

I realised that there’s no need to always be in a trade. Instead, it’s better to wait patiently for something I know and recognise to form. Once it does, execute with no remorse or hesitation.

I shifted my mindset from “how can I be on board before the big moves?” to “what does price need to show me to warrant pulling the trigger without blinking?”.

ICT’s content — especially the videos around market making/markets seeking liquidity — helped me think about markets and movements in price as a story.

Now I concede that sounds somewhat clichéd, but it’s been genuinely useful framing my thinking thus when starting off on the higher time frames:

  1. Where is the market coming from/what structure is it coming off?
  2. What is market structure telling me/is there a directional bias in play?
  3. Where is a probable area of liquidity/buy stops or sell stops resting that the market is likely to reach for?
  4. What’s the likely route for price to get to (3)?
  5. Which structures can I buy dips into/sell rallies into to take me in the direction of (3)?

This logic or list has helped my trading a lot, and the idea of “what would I do if I had to ‘make’ this market?” is a conceptual framework that I have found useful in building a higher time frame picture.

Lastly, ICT’s videos on order flow bring a lot of clarity to how price behaves to ensure that the majority of retail traders are either induced to the wrong side of the move, or are knocked out of the trade if they’re on the right side.

ICT essentially argues that a run on buy stops before price trades lower achieves two things: 1) induces breakout traders to get on the wrong side and thus act as liquidity for smarter/bigger traders looking to sell; 2) triggers the stop loss orders of sellers whose protective stops become orders to buy at market and thus also act as liquidity for smarter/bigger traders looking to sell.

The market will often wash out the ‘weak’ or ‘retail traders’ before finally showing its hand.

How has this influenced my trading?

  1. I have stopped breakout trading. Period.
  2. I trade two different stop run setups which rely on this principle.
  3. I only take setups where I can define my risk safely away from likely liquidity pools, or I enter the trade once liquidity has been probed.
  4. If I’m bearish based on higher time frames, I see runs above old highs as an opportunity to sell/if I’m bullish based on higher time frames, I see runs below old lows as an opportunity to buy.

In short, ICT’s videos helped me both contextualise and interpret runs above old highs/lows in a way that protects my account but also creates high probability entry opportunities. Not to mention the logic of his explanation is sound, internally consistent, and clearly visible on all sets and all time frames.

Short disclaimer: I’ve only ever watched ICT’s free videos and studied his charts that he has shared on social media. My understanding is that he has an extensive, year-long mentorship which goes into great detail and covers other subject areas that I have not been exposed to or had the opportunity to study.

Will Hunting (wmd4x)

@wmd4x

The first thing that really resonated with me from Will’s content is that he was essentially agnostic as to why price moves/behaves in a certain way and much more focused on how it moves.

This is in sharp contrast with all of the other teachers mentioned in this article, who have different (and at times conflicting) theories on why/what/who causes price to move from point A to point B.

In a sense this is the ‘purest’ form of price action trading; there’s no overriding conceptual framework and all the necessary information is offered by the price chart itself.

It was refreshing not to have to swallow a price action ‘theory’ and just have someone talking about the charts themselves more than anything, especially since all my teachers essentially disagreed on this matter!

It is my honestly-held belief that developing traders should not marry a conceptual framework when it comes to price action. In my opinion 1) claims are usually unfalsifiable; 2) it doesn’t really matter anyway.

The most important thing I learned from Will (perhaps inadvertently) is that the ability to define your risk when looking to trade a structure is arguably more important than the quality of the structure itself.

If you watch Will’s webinars/videos generally, you’ll know how much importance he places on being able to define one’s risk when taking a trade.

This helped me a lot. Far too often I would see a nice level/structure in the market and immediately leave a limit order in without thinking about risk definition. When it came time to add a protective stop, I looked for something reasonable or that made technical sense and would often realise that the R:R of the setup is far reduced because defining risk wasn’t straightforward.

I now implement a two-step test when deciding whether to trade a structure:

  1. Does the structure meet my rules (quality, time frame, etc.)?
  2. If I trade this structure, can I define my risk in a way that meets minimum R:R requirements?

Needless to say, both sections need to be satisfied.

The second step has protected my capital, and perhaps more importantly, made me far more selective when it comes to identifying trades.

Will, along with Tom Dante, heavily influenced my trading style with their emphasis on recency and current/live price action.

It’s tempting to read price charts the way we read anything else (from left to right, save certain parts of the world). However, reading the price chart from right to left is very valuable.

  1. Where/in what direction has market structure been broken recently?
  2. Where’s the closest support level to price/support now?
  3. Where’s the closest resistance level/resistance now?

I used to zoom very far out and try to draw trendlines and levels dating back as far as I could find, thinking that the longer a level has been around the more important it is going to be.

In fact, I’ve found it much more valuable to look at recent price action to see how the current market participants are behaving around the closest support/resistance structures to price.

I get a better sense of intraday flow this way, and the support/resistance levels that are based on recent price action and that are being traded by current market participants simply work better in my experience.

Will made diagonal structures interesting again.

I got into a bit of a bubble with my technical trading.

None of my mentors paid a lot of attention to diagonal structures (trendlines, walls, et cetera) unless they were either commenting how they don’t work or using them for a fade/pattern failure.

Will showed me that diagonal structures can be used brilliantly as support/resistance structures, not just as a tool for counter-trading!

Diagonal structures are a lot like horizontal levels: if you draw shit ones that don’t work, you can’t complain that the tool itself is worthless.

In his videos he lays out very clear and objective criteria for trendlines, walls, et cetera that remove a healthy amount of discretion (which is usually the main argument against using trendlines).

I am currently working on incorporating diagonal structures into my trading plan, at least as a factor of confluence.

Simon Kloot

@TraderSimon

The most valuable thing I learned from Simon, and by extension supply/demand trading, is to look for the origin of sharp rallies and drops in the market.

This appealed to me for two reasons.

First, it filtered out a lot of the noise. I was no longer looking for support/resistance levels everywhere and analysing individual candles. Rather, I just zoomed out and highlighted where the market moved away from an area with force. A fortiori, this ‘filter’ also often led me to the best support/resistance levels, so it was a win-win.

Second, it made logical sense. Whatever your conceptual framework, even if it’s not supply/demand, there’s no denying from a price action perspective that something important happened or formed at that level that ‘caused’ the market to move so quickly. The level proves itself to be important because of how sharply price ran away from it. So, naturally, it made sense to me that one would be keen to see what happens when/if price returns to the origin of the violence, so to speak.

In short, I now save a lot of time identifying where I want to take trades. Often, but not always, the structures I want to trade are either at the origin of a sharp move in the market, or they are sandwiched between two sharp moves in the market.

Another vital principle that was ingrained in my trading framework from Simon’s work is that structures become weaker the more they are tested repeatedly from the same direction.

It’s almost intuitive to think that a level ‘proves itself’ and becomes more ‘fortified’ as price bashes it from the same direction without a full breach.

Simon argues, much more persuasively, that with each strike the orders at that structure are absorbed until finally buyers overcome sellers at resistance (and it breaks)/sellers overcome buyers at support (and it breaks).

This has had a great impact on my trading.

  1. Several of my best setups are premised on the first touch/strike of a level i.e. when it is fresh.
  2. I’ve stayed out of many bad trades (and thus protected my capital) by not buying/selling levels that were getting beaten up, whereas in the past I would have interpreted the repeated tests as a sign of strength.

Conclusion

I hope you’ve enjoyed this somewhat lengthy excursion through my trading teachers and how they affected and continue to affect my trading.

Please find their social media/links below and go check out their stuff to see if it’s your cup of tea:

Tom Dante Twitter

TraderSZ Twitter

ICT Twitter

Will Hunting Twitter

Simon Kloot Twitter

You can find all the links to webinars/sites/courses and so on from there.

Thanks for reading!

Make sure to leave a ‘Clap’ if you enjoyed this article and would like to see it turned into a series.

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