hey hey what's up my friend so in today's video you'll discover why 95% of traders lose and how do you be the top 5% of traders so this video I'm not just gonna know tell you say you know what are some of the mistakes traders do bla bla bla no I'm gonna also give you actionable trading tips and and things that you can do right to get results right for your own trading sounds good then let's get started.
number 1 you don't understand the law of large number and that's why you get fooled by it so now some of you might be thinking rainer what's the law of large number of man so the law of large numbers large number states that in the short run your trading results are random and in the long run you'll be aligned towards the system's expectancy I know you're confused right Dori let me give you an example so let's say you have a trading system with a 50% wind rate so you can see over here okay many traders would think man ok a 50% wind rate so I can expect to ever win lost win-loss windows windows win-loss and all the way right and the answer is no that's that's not true you shouldn't expect this actually it doesn't happen in the real world of trading in a real wall of Freddie if you have a system with a 50% win rate it looks more like loose win-win loose loose loose loose loose win loose and win win win win lose win so you can see that in the real wall of trading you have losing streaks right losing streaks over here you have winning streaks and you pretty much realize that from one tree to the next right you do not know where there's gonna be a loser or a winner so this is what I mean by in a short run your trading results are random because if you look at it in the short run you have no idea no idea what that mixture is gonna be a loser or winner or loser or winner you just have no idea but in the big picture when you have a large enough sample size right that is where your system is aligned right towards its expectancy because you can see that over here out of a simulate that 16 outcomes right you can see that you have eight winners if you complete one two three four five six seven eight winners and it loses and pretty much gives you a 50% winrate right by the 50% win rate only occurs after a large sample size of traits to be honest this 16 traits it's quite a small sample size but you don't expect me to draw hundred a hundred series of L wlw down here so but the concept I'm trying to bring across is that your win rate will only be obvious right after you have taken a series of trait a sample size of train a large sample size of traits in a short run right your results are pretty much render we can be a loser or winner so because of this right the law of large number many traders they did not understand this concept and when they encounter a series of losing trades a losing streak they would abandon the trading strategy and start to look for the next best thing look for next trading system that has a higher win rate that is more profitable that makes more money that loses less it doesn't exist my friend any trading system that you come across there will be losing trades it's a matter of time before you know you encounter it so be prepared for this embrace it right and don't get fooled by the law of large number and one way to go about doing it is to execute a minimum of 103 so whatever trading system that you're trading or testing or whatever right don't abandon the system just because a losing streak come it will definitely come now that you know so before you abandoned it right execute the trades execute the system a minimum of a hundred times only then right you can evaluate the system objectively and know whether it works or not make sense okay so by the way right if this is the first time that you are watching this video hit the thumbs up button and subscribe to my youtube channel the link is on below click the button subscribe and this way whenever I publish a new video you can hear me cough right and share with you a new training techniques strategies and much more all right so do it right now so next one you don't have an H in the market alright so you probably hear the term and H often in the trading world and what it means is that an H right is something that you do repeatedly over time that yields a positive expectancy okay let me give you an example let's say there is a dice in front of you a dice has a number one two three four five six every time he comes up one three and five you lose one every time it comes up to four six you make one dollar clearly you know that if you roll the dice ten times hundred times a thousand times you're not gonna make money because you don't have a niche when you roll the dice so that's a normal dice normal normal rules of the game of it no dice rule but now let's say you have God's dice this dies or rather the rule of this game now is it's different right every time it rolls one three and five you make ten dollars and every time it comes up to four six you lose $1 so this God's dies in the long run will you make money I'm pretty done shooting in the long run you'll be really really Richard if you have this God's dice alright to play with because you clearly have an itch right in this roll of the dice and this is the same for casino when you go out to the casino you realize in the long run people lose money is because the house always have an itch over the players it doesn't matter whether the player have a adequate capital they have proper risk management or the right trading psychology it doesn't matter because the Aged trumps everything else the player can come in with the best psychology the best risk management the best everything and you'll still lose money to the casino right how do you lose is a death by a thousand cuts ability ah did okay so this is a why you must have an age it is the same for trading you must have an age in trading so not a question clearly is right now that's easy for you to say so how do I fight at age in trading there are many ways to do so right but to just get straight to the point the fastest way to get an H is to learn from traders who have come before you this means right you can get ideas from books right that share with you a back tested trading results for example following the train my endrias clean oh and holy grills binding ranch right mean reversion trading systems by Howard B bendy so these are books they already have trading systems complete trading systems from entries to exist risk management and everything and even provide you with the back tested results now it doesn't mean you just take the system and just trade it straight away no what you do is that you use that as a template as a fog nation for your own pretty more importantly yourself why this system makes money what is the wide behind it because once you can't understand the why once you understand that the principle behind it then you can make modifications you can make tweaks to the system right to suit your needs maybe adjusting the timeframe maybe adjusting the length of the trailing stop loss may be different in terms of the entry you must understand the why and these books right they give you a firm foundation to understand the why behind trading systems work right this is important okay so go and read books right trading books right that clearly right have our systems and results that are back with it the mixed one right why do ninety five percent of traders fail is because they treat the markets like an ATM I do not know how often I've seen in my facebook group hey Rainer is there a trading strategy that makes me ten dollars a day you know hey Rana I'm not greedy I just want to make five dollars a day in the markets hey Rainer I'm even less greedy I just want to make two dollars a day in the market I just want something consistent I only want to make 10 pips a day oh I only want to make 5 pips a day I'm not sure if you have seen you know such comments I I see that all the time and here's the thing the only way the only way that you can make money consistently every day from the markets is if only if a strategy works all the time so now let me ask you when does a trading strategy works all the time a trading strategy works all drive all the time only if market conditions never change now let me ask you have you ever look at a chart any chart any markets any timeframe where the market condition is always the same it's always in an uptrend it's always in a downtrend it's always in a range have you seen such market condition have you seen a market with this type of a phenomenon with the market structure where the price action where the market conditions is always the same no I've never seen such a market market conditions always changed is always move from an uptrend to range to a downtrend and it goes up a day and down and whatever market conditions are always changing and if market conditions are always changing what does it mean for your trading strategy it means that no trading strategy works all the time because you have to understand a trading strategy is only meant to exploit a certain pattern a certain phenomenon in the markets and when the phenomenon is gone when a market structure change the strategy is no longer going to work and if a trading strategy doesn't work all the time then how can you expect to make consistent profits on system pips every single day or every single week it doesn't make sense okay so don't treat the market like your ATM it doesn't exist it's not like you know you go to the open your mt4 trading terminal buy sell palm $50 bang in my pocket know you're dreaming doesn't exist don't treat the markets like your ATM if you want a fixed paying job if you're on a regular paycheck get a job not treating okay hot truth but this is the truth so one way to go about it is that for a full time traders what they do is that they understand this phenomena they know they're not gonna make money every single day every single week so what they do is they keep a chunk of their profits when times are good right maybe a certain market condition is favorable to their strategy right they don't just blow their profits on Lamborghinis Ferraris or I know or some hot chicks no they keep the bulk of their profits because they know when the drawdown comes when the tough times come those profits is what is gonna keep them afloat okay don't treat the markets like your ATM next one now this is this is this is important right the reason why many traders fail is because they're not willing to do the work right you believe what others say without verifying like for example hey Rainer can you tell me which is the best moving average out there hey Rana which trading strategy has a minimum of a one to two risk reward ratio hey Rainer can you let me know if this this time frame combination is good hey Rana hey Rana hey Rainer oh you have no idea really right the amount of questions I get they are not wrong but he tells me that the traders are just simply not willing to do the work they just want to be spoon-fed for example you know what I mean by I know you believe others without very fine you've often get it hey you know to be a profitable trader you need to have a minimum of a one to one risk reward ratio or you need a minimum of a 50% win rate really so let's put it to the test so this over here right I just pull this over here there's a couple of trading systems have developed this is a systemic train following and you can see that over here the wind rate is about 46.83 percent it's less than 50 percent it loses most of the I mean it more than half the time and you can see that in the long run it makes about eighteen point five four percent right over the last 19 years over here you can see that the year-on-year breakdown the system has written pretty decent over the last 19 years with less than 50 percent win rate or I can see that the equity curve sloping up higher over time so clearly you don't need a 50% winner it to be a profitable trader and the reason this is possible is because if you look at this profit factor this basically means risk reward ratio you can you see that it's because for every dollar you raise right you get back a dollar and 63 cents from a risk reward standpoint right this is favorable right for every dollar you risk you get back a dollar 63 cent on average so that's why even though you have less than a 50% win rate you can still make money in the long run another one Reina you need a minimum of a one to one risk reward ratio really okay this is a mean reversion trading system you can see below here there a the payoff ratio okay it's less than 1 it's zero point six nine actually what this means is that for every dollar you only get back 69 cents but this particular system okay it makes an average of about 24 percent right over the last 19 years and the reason this is possible is because of the wind rain the wind rate here is about 65 percent win rate so can you see that you can just take whatever others tell you at face value you got to verify you cannot just believe right something that someone said you can't even believe what I said what I'm sharing with you is based on my experience based on the data I have I could be wrong my data could be flawed okay you always have to take whatever information that comes your way and do the work verify it and see whether it's true or not take nothing at face value because I just prove it to you right you do it in a minimum of a one to one receiver ratio this risk reward ratio to be a profitable trader you don't need a minimum of a 50% win rate to be a profitable trader so these are just a couple of you know common saying right that is clearly not true and they are pretty much more down there that I have not yet you know talk about it so the lesson is you really got to verify and do the work take nothing at face value don't trust anyone do the work and verify the information yourself how do you do the work right number one validate any training strategy or concepts that you come across can be in via back testing or forward testing some some of you may be thinking arena that's really a lot of work that's why I just into the world you've got to be willing to do the work you don't expect to have a profitable business without doing the work you don't expect to set up a successful you know for example FMB a cafe right without doing the work you need to you know get the right contractors you need to find the right location get the supply of raw ingredients hire the waiter waitress you know run their operations you need to do the work and it's the same for trading it's a business there is what involve and if you're not willing to do the work then you've got to be willing to put your money because that's what's gonna happen okay so how do you do the work validate your trading strategy right and journal down your trades this is where you have data that you can work with right and to find out where this whether something works or not okay so we that's it a quick recap right the reason why most traders fail is number one they get fooled by randomness they do not know what is the law of large number in how it works number two they don't have an H in the markets right you must have an H and I'll share with you there are a few ways to get an H is you know you can read books right from traders who actually share with you that systems with back tested results number three don't treat the markets like an ATM right the market is not your ATM machine okay you're dealing with probabilities over here there are periods of a wins period of loss embrace them and number four right you have to be willing to do the work right there is no free lunch in this world nobody's gonna spoon feed you because if you want to be spoon fed then really trading it's not for you because you will most certainly feel okay so with that said right if you are right now if you learn more about my own trading methodologies techniques and stuff like that okay I am uh I am NOT going to spoon feed you but I'm gonna guide you right I have a couple of trading kites over here that you can learn more one is the ultimate trend-following guide and the ultimate guide to price action trading this one talks about writing trends in the market alright so you can profit in up and down markets and this one talks about ultimate guide to price action trading okay how to bed fight better time your entries and exits so if you want them right just go down to my website trading with Rainer come click this orange button and I'll send it to your email address for free okay so with that's it I have come towards the end of this video if you've enjoyed it hit that thumbs up button and subscribe to my youtube channel the link is below and I wish you good luck good trading I'll talk to you soon you
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