THE FIRST

TRADING
MANUAL
FROM TRADER SHAMU
Hi, I’m Shamu, a profitable trader with over four years of experience in the market. In the initial two
years, I struggled to turn a profit. I made the mistake of either risking everything in gambling-like
trades or becoming overwhelmed with learning without applying practical strategies. However, in
the third year, I took a step back, developed my trading system, refined my thought process, and
carved out an edge for myself. Since then, I've been consistently profitable for almost a year, with
monthly gains exceeding 30%.

I want to emphasize that while being a profitable trader is commendable, achieving high
profitability is what sets you apart. In my experience, merely breaking even or having minimal profits
accounts for nearly 90% of traders. However, I've transitioned into the realm of high profitability. If
you aspire to make a living through trading, you must aim for significant gains. I understand that this
journey can be challenging, especially without proper guidance. That's why I've taken it upon myself
to share my insights with you.

Contrary to what some gurus might claim, you don't need to spend thousands on courses or rely on
generic advice from YouTube. The path to success in trading requires dedication and a willingness
to learn. My goal with this playbook is to provide you with actionable strategies that can accelerate
your learning curve. Remember, to thrive in this field, you need to be among the top 1%, not merely
the top 10%.

By following the guidance outlined in this book, you'll shorten your learning curve and increase your
chances of success in the competitive world of trading.
CONTENT

THE SYSTEM
THE PSYCHOLOGY
THE MONEY GAME – RISK MANAGEMENT
 THE SYSTEM
I won't delve into technical analysis or fundamental analysis extensively in this manual. I assume
you've already familiarized yourself with these concepts, but as you're here seeking guidance, it's
evident they haven't provided the solutions you're looking for.

In my early years of trading, I devoted countless hours to mastering technical analysis, trying every
method I could find. However, despite my efforts, I never felt truly confident. It seemed the more I
learned, the more complicated my trading approach became. Yet, when I reflect on the initial days
of my trading journey, I realize that simplicity was the key to my early success.

I began with a clear mind, devoid of expectations or emotions, simply executing trades with a sense
of naivety and natural instinct. Remarkably, this approach yielded consistent profits in my first two
months. However, as I delved deeper into the complexities of trading, I lost sight of the simplicity
that initially propelled me forward.

Upon my return to trading, I rediscovered the power of simplicity. I realized that overcomplicating
my strategies only led to confusion and frustration. Therefore, I won't burden you with complex
theories or convoluted methods in this chapter. Instead, I'll emphasize the importance of simplicity
and clarity in achieving high profitability in trading.
The right time to trade

This is the market clock:

Market 24h Clock

Focus on the Tokyo, New York, and London session open and close times. These periods mark
significant market activity and are crucial for traders. Also the high light that have green shade
which bring more volatility, it is normally when a trend start.

For day trading, aim to enter trades at the start of these sessions to avoid getting caught in the
middle of volatile movements. This makes setting a safe stop-loss challenging and lowers your risk-
reward ratio. Exit trades towards the end of these sessions.
If you're scalping, these times present high volatility, offering opportunities to profit from rapid price
movements.

You can find more details here.

Which time-frame to trade

In trading, employing three distinct timeframes is crucial: a small timeframe for entry, a larger
timeframe for trade execution, and the largest timeframe for assessing the current trend or price
action of the market.

For instance, let's consider scalping:

Begin by analyzing the largest timeframe, such as 30 minutes to 1 hour, to determine the prevailing
trend and identify potential trade setups.

Transition to your preferred trading timeframe, like 5 minutes, and patiently await the price to reach
your designated zone or setup.

Utilize the smallest timeframe, such as 1 minute, to pinpoint your entry precisely. Once confirmed,
execute the trade on the larger timeframe, such as 5 minutes.

For scalping, I consistently use the timeframe sequence of 1 minute for entry, 5 minutes for
execution, and 30 minutes for trend analysis.

Similarly, for day trading:

Assess the larger timeframe, like 15 minutes to 1 hour, to ascertain the overall trend and pinpoint
promising trade opportunities.

Utilize a mid-range timeframe, such as 1 hour, to plan and execute trades based on identified
setups.

Refer to the largest timeframe, like 4 hours, to validate trade decisions and confirm the direction of
the trend.

My preferred timeframe setup for day trading is 15 minutes for entry, 1 hour for execution, and 4
hours for trend analysis.

Focusing on three timeframes helps maintain clarity in your trading approach, preventing over-
analysis that can lead to indecision and incorrect decisions.
The price action

When trading, it's crucial to analyze the largest timeframe for price action and trend. Here's a
breakdown of how to approach different market conditions:

Market Direction:

If the market is trending, expect it to continue until proven otherwise, which would indicate a
potential shift to consolidation.

Ensure your trades align with the current direction of the market.
Market Consolidation:

If the market is consolidating, determine the range within which it bounces.

Sell at the top of the range and buy at the bottom until there's evidence of a change, indicating a
potential shift to a directional trend.
Chaotic Market:

If the market appears chaotic and it's unclear whether it's consolidating or trending, it's best to step
aside and avoid trading until clarity emerges.

Remember, the market is always present, and there will be future opportunities.

Avoid Counter-Trading Directional Moves and Trading Breakouts During Consolidation:

Never attempt to counter-trade a directional move as it's likely to result in losses.

Similarly, refrain from trading breakouts during consolidation periods as it poses a high risk of losing
money.

Following these guidelines will help you navigate different market conditions effectively, minimizing
the risk of making costly trading mistakes.
An entry
In my trading philosophy, simplicity reigns supreme. I've learned to streamline my entry strategies
to avoid over-analysis and capture movements efficiently. Here are the entry techniques I rely on:

3 Bar Swing:

When a market, previously trending upwards, breaks below the low of the last three bars, it
suggests a possible trend reversal. Conversely, for markets trending downwards, I watch for the
opposite pattern.
4 Bar Fractal:

This method involves observing whether the close of the current bar surpasses the high or low of
the previous bar. Additionally, I ensure that the current bar's close is higher or lower than the high or
low of the bar three bars prior. Meeting these conditions signals a buy or sell opportunity.

It is the same as the 3 bars swing, except the second bar is ignore. So I won’t put image here.

School Run (After a Movement, 4 Bars):

After a notable market movement, I look for four consecutive bars with lower lows and lower highs
in their bodies, disregarding the wicks. Following the fourth bar, I enter the trend. Conversely, for a
reversal scenario, I look for the opposite pattern.

By simplifying my entry strategies, I can swiftly identify potential trade setups without getting
bogged down in unnecessary complexity.
How to apply

Before executing a trade, I follow a structured approach that ensures I'm well-prepared and
focused. Here's how I do it:

Identify Execution Timeframe: Begin by selecting the timeframe you intend to use for executing
the trade, as mentioned earlier. This timeframe serves as your primary reference point for trade
entry and management.

Wait for Price Action Confirmation: Next, patiently wait for the price to reach the potential entry
zone identified based on the price action observed on the largest timeframe. This step ensures that
your trade aligns with the prevailing market conditions.

Transition to Smaller Timeframe: Once the price reaches the entry zone, switch to a smaller
timeframe to fine-tune your entry strategy. Here, you'll patiently wait for a clear entry signal to
emerge before proceeding.

Execute the Trade: Return to the execution timeframe and execute the trade based on the
confirmed entry signal. By following this structured approach, you increase the likelihood of
entering trades with precision and confidence.

Set Stop Loss and Profit Target: Implement a stop loss placed at 2 times the Average True Range
(ATR) to manage risk effectively. Your profit target remains open-ended, allowing you to capitalize
on favorable price movements.

Trailing Stop Loss: To protect profits, trail your stop loss by the value of 2 times the ATR relative to
the current price. This allows you to lock in gains as the trade progresses, while also providing
flexibility for further upside potential.

Adapt to ATR: Monitor the Average True Range (ATR) to gauge market volatility. If the ATR is too low,
consider switching to a higher timeframe for better clarity. Conversely, if the ATR is excessively high,
opting for a smaller timeframe may be more suitable. Aim for a timeframe where volatility is
sufficient yet stable for effective trading.

By adhering to this systematic approach, you can navigate the markets with confidence and
discipline, ensuring your trades are well-executed and managed.
 TRADING PSYCHOLOGY

Writing about trading psychology is indeed challenging, as it encompasses various complex

aspects that are crucial for success in trading. In my experience, I've come to understand that
trading psychology, risk management, and having a robust trading system are deeply
interconnected elements. They work synergistically to shape a trader's mindset and approach to
the market.

Effective risk management not only protects capital but also fosters a positive trading psychology.
Similarly, a well-defined trading system provides structure and discipline, which are essential for
maintaining psychological balance during the ups and downs of trading.

By following the systematic approach outlined above, along with implementing sound risk
management practices, traders can cultivate a resilient trading psychology. It's a journey of trust
and confidence in the process, especially after rigorous back testing and gaining conviction in the
system's effectiveness.

For further insights into trading psychology and risk management, I highly recommend exploring the
teachings of Mr. Tom Hougaard. His book "Best Loser Win" offers invaluable wisdom on navigating
the psychological challenges of trading. You can find more information about his work and
resources on his website here or through various publishers worldwide.
By integrating the wisdom of experienced mentors like Mr. Hougaard into your trading journey, you'll
be better equipped to develop a strong trading psychology and make informed trading decisions.
 THE MONEY GAME- RISK MANAGEMENT
Absolutely, the term "financial market" reflects its essence as the marketplace for money, the arena
where the game of wealth unfolds. Unlike a game of being right or an exercise in analysis, success
in the financial market hinges primarily on effective money management. This is the crucial factor
that separates profitable traders from those who struggle to break even.

In my own trading journey, I've found that money management serves as my edge over the trading
system itself. While my win rate may not be high, my ability to capture significant profits when I do
win, and to limit losses when I'm wrong, is what ultimately leads to success. It's not about always
being right; rather, it's about maximizing gains during winning trades and minimizing losses during
losing trades.

The key mindset to adopt in navigating the financial markets is to focus on maximizing profits when
you're right and minimizing losses when you're wrong. This approach allows you to effectively
intercept the movements of the market and navigate its fluctuations.

I've learned from experience that excessive reliance on technical analysis alone doesn't guarantee
profitability. While technical analysis can provide insights, it's the mindset and approach to money
management that truly determine success in the financial game.

In the following sections, I'll guide you through my approach to risk management, explaining each
step in detail to ensure you can implement it effectively and with confidence. With the right mindset
and risk management principles in place, you'll be better equipped to navigate the financial
markets and achieve your trading goals.
The first trade
Yes, the first trade can indeed have a significant impact on a trader's psychology and subsequent
trading decisions. Many traders have experienced the scenarios you described:

Losing on the first trade and then succumbing to revenge trading, risking too much and ultimately
losing more.

Encountering a losing streak after the first trade, leading to a substantial drawdown in their trading
account.

Winning on the first trade and feeling a sense of dominance, leading to continued success
throughout the day.

Risk management on the first trade is crucial for setting the tone of your trading session. Risking too
much on the initial trade can amplify the psychological impact of a loss and potentially lead to
emotional decision-making.

Your approach of risking half the usual amount on the first trade is a prudent strategy. It allows for a
controlled risk exposure, providing a buffer in case of a loss while still allowing for potential gains. If
the first trade is unsuccessful, maintaining a half-risk approach for subsequent trades can help
mitigate the impact of a losing streak and preserve capital.

By implementing a disciplined risk management strategy from the outset, traders can better
manage their emotions, maintain a clear mindset, and navigate the ups and downs of the market
more effectively. This approach fosters consistency and resilience, key qualities for long-term
success in trading.
The 10% risk
For me, I always risk 10% of the amount that I am willing to lose.

Why 10%?

Risking 10% allows for a balanced approach towards potential gains and losses. It provides an
opportunity for significant returns while also minimizing the impact of losses, making it easier to
recover from setbacks.

Here are the ROI of 10 trades with win rates of 30%, 40%, and 50%.
Scale up your win
Consider starting with a risk of 1%. If I win a trade, I'll increase the risk by 1% for the next trade. For
instance, if I win, the risk for the next trade will be 2%, then 3%, 4%, and so on. If I draw, I'll maintain
the same risk level. However, if I lose, I'll decrease the risk back to 1%.

Given a risk-reward ratio of 1:1, any profit exceeding 1% will be considered a winning trade. The
result is amazing. If I have 10 win streaks, the result will be 55%, but the opposite is only minus
10%.
Add to winning trade, reduce your losing trade
In my trading approach, I adhere to a disciplined strategy for both winning and losing positions.

When I have a winning trade, I capitalize on momentum by adding to my position every time the
price moves 2 times the Average True Range (ATR), while maintaining a stop loss set at 2 ATR from
the entry point. Once my trade achieves a profit of 1R (equivalent to 2 ATR), I incrementally increase
the position size by adding the same volume, simultaneously adjusting the stop loss to the entry
point. This risk management strategy ensures that if the price retraces and hits the stop loss, the
trade incurs a limited loss of 1R. However, if the price continues to move favorably, the profit
potential escalates, doubling at 2R and tripling at 3R.

Conversely, for losing positions, I adhere to a strict rule: never Dollar-Cost Average (DCA) or add to
the losing position. Instead, I remain patient and vigilant. If the price immediately moves against my
entry, experiences a brief fluctuation before retracing, or remains stagnant for an extended period, I
consider reducing half of the position. This precautionary measure safeguards against significant
losses and preserves capital. Importantly, I maintain the flexibility to reevaluate and potentially add
to the position when the price aligns with my trading thesis.
 INSTEAD OF SAYING GOODBYE
If you've journeyed through this playbook, you hold the keys to becoming a highly profitable trader
in the market. Simply follow the instructions laid out here. Trust in the process, and profits will
inevitably come your way. Feel free to adapt and refine these strategies to better suit your individual
style, including risk management techniques.

For any further discussion or questions, don't hesitate to reach out to me:

Email: [email protected]

Instagram: @Sh.4mv

Thank you, and here's to your success in becoming a profitable trader.