🔷 Expectancy spreadsheet (Make A Copy!): docs.google.com/spreadsheets/d/1Bn2vcxMvtOc7KQEuUDFTKLfFf60UL03B67Zj_hbLzmA/ 🔷 Monte Carlo in Pine Script: th-cam.com/video/y97u_Grc0gU/w-d-xo.html 🔷 Develop your own trading systems: courses.theartoftrading.com/
Dude, listen carefully, I will tell you only one time: 1:16 *NEVER say again math is boring!* otherwise Tony (a.k.a. π crusher) will visit you! Never mess with the Math Mafia! Math is cool!
@TheArtOfTrading Hey, I wonder what would you say about this SMB video. th-cam.com/video/6L7hxMfTh34/w-d-xo.html - "The Biggest Hidden Key In Trading", do you think they have made some kind of calculation error or something else. Can you quickly discuss why 3:1 RR and 50% probability are considered C trade.
I have modified this to take into account the use of stop loss. on expectancy I set c3 to the stop loss and in column d instead of it selecting 1 on the loss (total) it instead multiplies by c3 the stop loss. Wit that I can win a little as less then 7% of the time and still grow an account. I messed up a little bit and set gain to 130% when I meant 30% so a 40% win was the minimum win.
After 15 years of trading myself, I'm pretty sure this is the best video I've seen on the topic. He's realistic and honest, his math is fact-based, empirical. I'm saving this link to pass on to new Traders, I wish this advice was available when I first started.
Thank you for sharing your thoughts, and I completely agree-this video really does hit the mark on so many levels. The blend of empirical math and real-world trading insights is something every trader needs to grasp, especially when starting out. The emphasis on expectancy and risk management is spot on, and it's refreshing to see a realistic approach that doesn't sugarcoat the inevitable drawdowns. One thing that particularly resonates with me is how understanding probabilities can transform a trader’s perspective. It reminds me of how I approach reversion-based trading-by focusing on where the price is likely to return rather than chasing it. This mindset shift, rooted in solid math and probabilities, has made all the difference in achieving consistency and growth. Passing this on to new traders is a great idea. It’s the kind of foundational knowledge that can save them years of trial and error. I wish I had access to content like this when I was starting out, too!
I love the sobriety of this video. There are no jets in the background. Trading is the hardest thing I've ever done. This video should be MANDATORY for any new trader.
Stop attaching your self-worth to the outcome of your trades. You have no control over the outcome. You’ll never know who caused the outcome of your trade. Your mythology doesn’t predict the market, there’s a higher probability of one thing happening over another. There’s a random distribution between wins and losses. This is a game of probabilities. If you truly believe this, you’ll be alright.
Yea that's also gotta be why hedgefunds exist Literal mathematical geniuses have said numerous amounts of time that the market isn't even near fully efficient but keep coping I guess
The job of a trader is to accumulate larger wins than your losses. You ARE going to have losses, it's part of trading. The sooner you realize this and remove your emotions from your trading, the quicker you will improve.
This is one of the most foolish things I've heard. You have ALL of the control in deciding the positions you take. Learn to take accountability - your life will get better. God bless.
I study and use options to create positions with asymmetrical risk to my upside. I'm far from perfect - bug I am in control of my decisions - the market is never wrong - and if I'm right the upside can be 3-10x plus. Take it easy.
This should be shared more often... I begin my trading journey 1,5 years ago and the last 12 months ive been profitable and can consistently compound my profit.. All of my strategy basicly follow the same thinking brought in this video. The moment u use "data" in trading and you know from backtest or forward test that the probability, R:R, Cons Loss, Cons Profit, and Average Hold period makes you comfortable doing said startegy.. you are no longer a gambler. Its consistency that will make you profitable in the end. But being consistent is the barrier that needs to be practiced over and over again in every trade you make.
What kind of strategy do you use? And if you aren’t comfortable sharing that, then how might I implement what is taught in this video. I am new to trading and anything will help. Thanks!
Never truly understood “gamblers fallacy” until this video. I would follow my system and if I noticed I would win 3-4 trades in a row. I would try to make sure my 5th isn’t a losing by moving my stop to break even randomly, expecting a loss to be due. Now I know each trade is actually independent. Thank you for clarifying this!!
Excellent video. This is trading, yet 95% of traders rely on "the perfect entry". Once I accepted that my methodology has a 45% (often less) win rate, and hold out for my 2.55+ r/r trading became more systematic. It took years. Great comment on fixed r:r vs dynamic. A dynamic r/r leaves too much room to change your mind.
Thanks for sharing your experience, and I completely resonate with your journey. The idea of seeking the "perfect entry" is a common trap, but the real magic happens when you accept the probabilities and focus on the bigger picture. Your 45% win rate with a 2.55+ R is a prime example of how powerful a systematic approach can be. In my system, I also work with a win rate around 40% but with a similar 1:2 R ratio, and it’s been a game-changer. It’s not about being right all the time; it’s about letting those winners run and managing risk effectively. Fixed R can provide that discipline, reducing the temptation to tweak your strategy on the fly-a temptation that often leads to inconsistency and frustration. Trading becomes a lot more predictable when you let the probabilities work for you, and you’ve clearly mastered that mindset. Great to see others finding success through similar principles!
The risk reward of 2:1 or 4:1 whatever does not account for the probability that the closer limit will get hit first, the market just need to wiggle to hit something and the stop loss is closer than the take profit which is farther away. So be cautious with the risk reward math without considering probability of which one gets hit a lot.
@@ShowMexicanoyMasI also use negative RR and it works wonders. I don’t understand why though, I just have always done it since the beginning instinctively.
@@Santiagoacph It works because of the simple fact that your tp is closer from your entry point. It’s simple math, you obviously have to have a high win rate in order for this to work in the long run 👍🏼
@@rit3xxI open 6 trades aiming for 0.1% each trade and stop loss is 1.5% on FTMO, so if all trades close in profit I make 0.6% and if I lose 1 it takes me about 3 trading days to recover from a loss So my RR is -15:1 each trade has very high probabilities of winning
I needed to hear this; the best part for me was reinforcing the idea that capital growth is an outcome of a process....and that there will be aberrations - like winning and losing streaks - which should not get to one's head; the Gamblers' Fallacy is very insightful....I had never considered this earlier. Thanks 👍
Very helpful. I'm about 1.5 years into trading and I only recently started basing my position sizing on getting my risk of ruin (where ruin = 30%ish drawdown) to 0.5%, using forward-testing data only from my live trades. Takes time to get the data, but I started with a win streak which meant I could technically risk 5% per trade lol. Better to project it forward and keep collecting data though since it has already fallen (more so due to trading errors though). My numbers still support 5% risk for the time being but if I keep making trading errors they won't. Then I can adjust weekly. It's insane how I spent like 10K on a course and coaching in the beginning, and they literally have the most mouth-breather idiot position sizing strategy possible, just telling you to trade a certain number of contracts and slowly work your way up each week as long as you're winning (1, 5, 10 etc.), not even teaching about adjusting position sizing based on stop invalidation etc... lot of harmful BS out there in the trading education space.
Thank you so much, dear Matthew! This is my third attempt at getting into trading. Until now, it felt like an unsolvable puzzle, but this time I truly wanted to understand it. Then I came across your video “The MATH OF WINNING in trading,” and everything finally clicked. After studying it closely for the past four days, I feel a new sense of clarity and confidence. Your explanations, your voice, the pacing, and the structure of your content - everything comes together perfectly. As an IT professional, I need systems and clear approaches, not vague interpretations. You gave me exactly that. For the first time, I truly understand what trading is about - maybe not entirely yet, but I’m on the right path. Your blog also deeply inspires me and gives me the courage to keep going. As soon as I achieve my first successes in trading thanks to you, I will dive joyfully into your courses. I’m sure they are just as amazing as your videos. Thank you from the bottom of my heart for your valuable content, your passion, and for showing people like me the way. I’ve found my mentor - I love you too, Matthew! ^^
As someone who watched a fair bit of videos on trading I can confidently say that this one is of the highest quality there is. Thanks for all the pieces of advice!
I found this incredibly valuable. Two very expensive causes didn't have anything on this and the first lead me to take trades with 2% risk without knowing any of what you said and without a 40% win rate. These days i do 0.5% but now i know what to do to test of i can handle 1%, especially after pine coding my stratefy. Thanks for this video!
@@zetro8870 because the fear of opportunity makes it at that you are not profitable, for example the vast majority of people have a part of them that are scared to enter a trade when their system tells them too, but they either take it too late or they just miss it and stress about it and press themselves and those mistakes grows that misconfidence. Because trading has such a free dynamic built in it, it makes it very unnatural for your brain to create your own rule and respect it no matter what ! and if you take in real life context ( family problems, financial problems and etc) the greediness to resolve your problems with money sometimes takes the best out of you and you lose. ego, self discipline is actually a hard thing to master because even if you think you are doing the right thing, well actually you do sometimes still cross the boundaries in a moment of adrenaline rush, and all those elements combined together will impact your trading inevitably. theoretically trading isn't that hard, there is plenty of things harder than that but it is the one thing that takes you the closest to gambling if not well done and so the feeling aswell. (I'm profitable) and I can say all my friends have the same level of knowledge as me in theory, but most of them haven't understood the concept of really mastering your emotions.
@@zetro8870 so if I have to tell you how to be profitable in one sentence : understand your fear, use it to gain confidence by having a positive mindset at all times ! Fear and Confidence are the key words, you need to eliminate that Fear and let opportunities flow how your theory is based on.
@@zetro8870I know it’s not the same because it’s a demo account and it’s slightly different to the real market, but I started studying and operating a demo account on August 5th this year and today is September 1st. I did almost 3000USD on my first month. I just used mostly 1,5 lotes and very conservative risk management. I have low level skill but I approach it with a very cold mindset and being very conservative. Time will tell if I blow the fuck up of my account when I use real money but as of now, I feel it’s 80% psychology and 20% skills.
Thank you, I've learned more from you in the last 30 minutes than any other trading video. I am 69 yrs old and have become wealthy by investing over the last 40 yrs. Presently, I am very heavily invested in gold, silver, and the miners. I have several trading systems that I have adapted from known successful trend following systems. I lost a lot of gains in 2014 because I was heavily weighted in oil. I trade to educate myself so I won't have any severe draw downs this late in life. My trading account is less than 3% of my liquid net worth. I have learned that picking the correct investment category; real estate, stocks, bonds, commodities, precious metals, is the more important than picking individual instruments in each category. Different categories perform better in different times. My frustration is that even though my trading system has a good total return and low drawdown, It barely beats buy and hold for precious metals and stock indices. Both are up about 20% ytd. My question to you is: What total rate of return can be expected from a good trading system. I have heard 30% per year is reasonable. The "Turtles" had a few 100% years. Could you please shed some light on this subject. Thanks.
There isn't such a thing as a trading "strategy" that holds up over time without bad streaks. That's because the market changes over time and previous patterns disappear and reappear as it changes. I.E periods of trendy movements are followed by consolidation and pullback, but you can't really know for certain if you're trending or about to reverse until that's in hindsight. Buy and hold on stocks with tailwinds is the easiest strategy to run. Trying to craft a winning trading system requires constant research and analysis, which is really quite hard to do unless you're a professional finance professional doing this full time. Renaissance had over 30% returns a year for decades, and they're the best in the world. The returns would be higher if they weren't managing billions in AUM, as the size decreases the number of higher, easier probability trading opportunities. Good luck!
This is gold! I remember this channel from a while back, I learnt TV pinescript coding from you to make my trading systematic and backtest my trading logic. A big thank you!🙏🙏
You are the first person to whom I have subscribed, someone who speaks as if am speaking to myself. Of the lakhs of videos there are hardly 8-10 videos ever worth watching. This is one of them.
I had problem comprehending trading in general. I tried watching other YT trading channels, but they made the concepts more complicated. I was almost giving up until when discovered your channel. I love the way you break down the content and explain everything in detail. The videos are easy to follow
The best video on trading. This is how one becomes successful in trading! Subscribed and saved this video for future reference. I need to rewatch this every year. Thank you!
Amazing dude, one of the very few educators in this field, definitely subscribed and suggest others to do the same who's looking for a legit, no bullshit information. Pure math and REALISTIC expectations outlined, no bullshit, no fake promises.
Hello From India And Lots Of Appreciation For This Video Amount Of Quality In This Video I Can't Describe It With Words This Is The True Trading Principles ❤
TY for the Excel sheets! I knew the formula but have always been too lazy to make a spreadsheet😂 At least I now prove mathematically why I win or lose! VERY HELPFUL! I am sure tomorrow's trading will be better!
I can't lie, I'm a financial engineer and I wouldn't quite consider this as the "math" behind trading rather "a small statistic overview of day trading"
Excellent content. Although I beleived is the philosophy, but this video helped me in reinforcing my beliefs with solid arguments; especially the google sheet is really helpful. The market is a random walk, only a system with edge, back-tested for at least 1000 trades with established win rate and clear RRR is the key to sucess.
I'm so glad you took the time out of your schedule to make this gem for us. I'm a new trader who's just understanding that psychology and risk management is the most important part of the game. I would love if you could make more videos like this and give tips on trading psychology. Much love from Jamaica 🇯🇲
I’ve been trading for about 6 months. Had beginners luck grew my account quick and blew half of my profits. Sized down and kept learning. Now I have a solid strategy I make money consistently. I grew my account back to where it was. The key is to not over size on trades. Better to take smaller gains than taking big losses. I’m putting money from my paycheck into my account and just growing it slowly and with time will increase my size once i have enough to do so. MANAGE RISK!
I’d love your take on how Chaos theory applies to markets as I know a few people who thing that price is completely random and site statistical theories as to why it is and how TA is a worthless way to trade. Thanks for the video!
Man! This video is a gem. I love your spreadsheet man, it is perfect for giving us a perspective on the statistical aspect of a trading system. Thank you so much sir.
Excellent video. I think this is an extremely important part of trading most struggling traders overlook. Appreciate you taking the time to make great content on the subject.
Forget about trades, I finally came across a westerner who looks 34 when he is actually 34. Otherwise almost all westerners look 55 when they cross 30.
Thank you for sharing this video. I thoroughly enjoy it, and thanks for some of time-tested nuggets of wisdom in dealing with the Markets with our emotion in control.
This is the best trading video it change my mind about trading before this i uses trail SL and SL breakeven blah blah but now i use only fixed risk reward ratio with a high win rate and guess i am making money
I just stumbled upon the best video about trading. It's practical, based on math and facts, and there's no BS at all. This kind of video should be shared more than the unrealistic stuff you casually see on social media just to sell courses or whatever. Salute! I can also see in my backtested data that the ideas presented in the video are realistic.
Thank you. Without question, anyone who is struggling with trading or understanding why a trading plan should be used (win or lose), for a period of time to build consistency, should watch this video.
Thanks, that was all explained really well. I’m going to check out the spreadsheets - I’d definitely be interested in the TradingView backtesting episode. Cheers.
I don't know what to say.. guess that only lefts me with a really BIG thank you! The way you articulate is easy to the ear. And the effort you put into this clip. it really helps man. Pls keep up the work.
Gamblers fallacy doesn’t really fully apply to markets. Assets do have a tendency to revert to the mean, making the odds of the reversion play a slightly better bet in severely overbought or oversold conditions. That being said, things can stay overbought or oversold for a long time. Sometimes
To add more complexity, strong stocks have a tendency to get stronger, weak stocks weaker, continuation bets have better odds than the coin flip, but eventually the asset runs into the laws of large (or small) numbers, the over extension gets ridiculous, and other actors in the market are highly motivated to cover shorts or sell longs. In short; nothing gos in one direction only forever
Seek to own shares of a good company at any price... I have a buy in amount then buy every day at a reduced set dollar amount anything under 3% profit. I then sell at 25% profit. I also have a cap on how much I allow for total cost basis on any one stock.....
Appreciate you sharing a part of your real life journey. The video I feel is definitely made for the traders who are serious and have a passion or a goal to understanding how to be successful in the world of trading eventually investing as well. Thank you so much...was definitely great food my trading soul. Cheers and talk soon...maybe 1-day. Peace from Seattle, USA
Really great video! Probability is sometimes complicated for me. The example with 10 losing bets on black in a row doesn't make the 11th more likely a black. However in my head, the overall chance of 10 red in a row is higher than 11 in a row, so its more likely that 11th will be black.
Great stuff, Trading 101, been looking for this kind of deep-dive probability-blast a long time --- should be required viewing by all traders starting off. Dread Monte Carlo!
My question is how does this change with investing vs trading? When you are investing in a company that has fundamental value vs trading a technical edge.
as a poker player, losing streak or downswings are what makes you or breaks you the mental game is so important when you are in a downswing. the best way to explain newbs the math is just with the roulette wheel, the casino does not win all the time nor do they care how much or when you are betting. every time the ball lands they make 3~% in the long run.
with the gamblers fallacy what about money managers that like to implement winning strategies or assign more risk capital to strategies coming out of a draw down. Is that different and if so why? I would guess because it's a series of trades and not a single trade?
very very interesting!Lost of traders start to make a strategy based on risk management that most of the time is not put in place as it should be. Great video!
Beautiful, realistic, down to earth. This is the type of videos that every trader should watch, even from time to time, to go back to the notes from a video like this. To keep your grounded. Thanks for this simple yet profound video.
What I been understanding so far no matter the probability you should look at each trade as 50/50 (just an opinion) I’ve had so many ahh ha moments it’s ridiculous just to see me lose not saying i wasn’t expecting to lose but i wasn’t expecting if you get what i mean what I understand now is you can’t stop loses but you make them smaller i get out of trades faster now instead of it hitting my full SL And also did my research on probability the more you bet the bigger the losing streak can grow it’s ridiculous the chance you have of losing so many in a row even with a 70/ 80 win rate you will reach a big losing streak at some point and there are to many variables to include especially in probability and after so many bets and the losers aren’t uniform so you can’t predict the next loss or win tbh all you can do it reaact and go off feeling tbh to stay above water or you’ll break even or lose to much or not win enough I’m not saying guess but if you win or lose you wasn’t right or wrong but I hedge now it’s making me feel better so far
All my testings showed the same result as this video, also from my end the lower the win rate the higher the long term revenue. Bottom line is any system will work if you have the emotional IQ and technical dicipline
OK, lets face something squarely on. As traders we are all risking money on the uncertain outcome of price action. By definition that makes us GAMBLERS. All of us. AND THAT'S OK. You said in the video that being a smarter trader has made you a smarter gambler. True, because you are betting smarter on price action you are getting constant practice on betting smarter generally, and that translates directly into smarter betting in any other game of chance. And make no mistake, trading is a game of chance. Consistently profitable traders have learned to gamble intelligently, rather than recklessly, ignorantly, or adictively, and to do it with sufficient consistency that they can afford to do it professionally and make their living at it. It's fine to tell non traders that you are a trader or investor because it sounds more respectable, but let's stop kidding ourselves.
Would you consider the casino gambling whenever they allow someone to bet against them (the house) on one of the games? Most people would say that the casino isn’t gambling because the odds are stacked in their favor. It’s no different for profitable traders. Profitable traders are the casino in the markets they trade. I have multiple trade strategies that have been throughly backtested on over twenty years of data (which this process is a science within itself). I know the odds of winning for each strategy, how much money is at risk and how much I will gain for each trade in the strategy. Yes, just trading some random trade setup a few times is gambling, but systematic backtesting with the mathematics supporting the profitable trade setups and systematically taking every single trade for that strategy is not gambling, that’s science. To people that doesn’t understand the science and mathematics involved does look at it as gambling.
Wow, this blew my mind. Here is a fantastic example of the shortcomings of English language. The coin toss and the events rarity as a coin continues to land on heads would both be referred to as chance, probability, rarity, and likelihood. However one of them holds constant universal weight that is unwavering, while the other, though still a probability for lack of a better word holds absolutely no weight in the outcome. It’s almost meaningless in contrast of the other, yet refers to the same event. This is something that would be difficult to teach even in school, and is PROBABLY why the irrational thought process exists to begin with. One would assume a more sophisticated language might take this weighted measurement into account. Thanks for the new outlook, now back to being ret*rd.
I get it, the market doesn’t care, and I totally agree with you on that. But what I can’t quite explain is how, no matter what strategy I try, I always seem to end up breaking even. This has been my experience with everything I've tried over the last 2-3 years. It’s almost as if the market is determined to balance me out.
So, this is my trading phycological question, is that I can tolerate the losing streak trades, but I cannot bare those trades which goes halfway and end up lost. is it better to move the stop loss to breakeven or just leave the stop loss there? which is better? because this will affect the win rate. hope you can make a topic to explain this. Thank you in advance.......
![ประสบการณ์ จ้าง Developer ที่ผมจะไม่มีวันลืม [ภาค2]](http://i.ytimg.com/vi/pZbsSDRrmXA/mqdefault.jpg)
🔷 Expectancy spreadsheet (Make A Copy!): docs.google.com/spreadsheets/d/1Bn2vcxMvtOc7KQEuUDFTKLfFf60UL03B67Zj_hbLzmA/
🔷 Monte Carlo in Pine Script: th-cam.com/video/y97u_Grc0gU/w-d-xo.html
🔷 Develop your own trading systems: courses.theartoftrading.com/
Very useful video. Thanks for producing.
Dude, listen carefully, I will tell you only one time: 1:16 *NEVER say again math is boring!* otherwise Tony (a.k.a. π crusher) will visit you!
Never mess with the Math Mafia!
Math is cool!
@TheArtOfTrading Hey, I wonder what would you say about this SMB video. th-cam.com/video/6L7hxMfTh34/w-d-xo.html - "The Biggest Hidden Key In Trading", do you think they have made some kind of calculation error or something else. Can you quickly discuss why 3:1 RR and 50% probability are considered C trade.
Thanks for the information.
I have modified this to take into account the use of stop loss.
on expectancy I set c3 to the stop loss and in column d instead of it selecting 1 on the loss (total) it instead multiplies by c3 the stop loss.
Wit that I can win a little as less then 7% of the time and still grow an account.
I messed up a little bit and set gain to 130% when I meant 30% so a 40% win was the minimum win.
After 15 years of trading myself, I'm pretty sure this is the best video I've seen on the topic. He's realistic and honest, his math is fact-based, empirical. I'm saving this link to pass on to new Traders, I wish this advice was available when I first started.
There are two books written by Ralh Vince that every trader must read.
Thank you for sharing your thoughts, and I completely agree-this video really does hit the mark on so many levels. The blend of empirical math and real-world trading insights is something every trader needs to grasp, especially when starting out. The emphasis on expectancy and risk management is spot on, and it's refreshing to see a realistic approach that doesn't sugarcoat the inevitable drawdowns.
One thing that particularly resonates with me is how understanding probabilities can transform a trader’s perspective. It reminds me of how I approach reversion-based trading-by focusing on where the price is likely to return rather than chasing it. This mindset shift, rooted in solid math and probabilities, has made all the difference in achieving consistency and growth.
Passing this on to new traders is a great idea. It’s the kind of foundational knowledge that can save them years of trial and error. I wish I had access to content like this when I was starting out, too!
@@t_barraca would love to read them could you share the names of those two because ralph has many books
couldn't agree more.
A must seen video for anyone who will start trading.
@@t_barraca which books?
I love the sobriety of this video. There are no jets in the background. Trading is the hardest thing I've ever done. This video should be MANDATORY for any new trader.
Stop attaching your self-worth to the outcome of your trades. You have no control over the outcome. You’ll never know who caused the outcome of your trade. Your mythology doesn’t predict the market, there’s a higher probability of one thing happening over another. There’s a random distribution between wins and losses. This is a game of probabilities. If you truly believe this, you’ll be alright.
Yea that's also gotta be why hedgefunds exist
Literal mathematical geniuses have said numerous amounts of time that the market isn't even near fully efficient but keep coping I guess
Mark doglus ❤
The job of a trader is to accumulate larger wins than your losses. You ARE going to have losses, it's part of trading. The sooner you realize this and remove your emotions from your trading, the quicker you will improve.
This is one of the most foolish things I've heard. You have ALL of the control in deciding the positions you take. Learn to take accountability - your life will get better. God bless.
I study and use options to create positions with asymmetrical risk to my upside. I'm far from perfect - bug I am in control of my decisions - the market is never wrong - and if I'm right the upside can be 3-10x plus. Take it easy.
This should be shared more often...
I begin my trading journey 1,5 years ago and the last 12 months ive been profitable and can consistently compound my profit..
All of my strategy basicly follow the same thinking brought in this video.
The moment u use "data" in trading and you know from backtest or forward test that the probability, R:R, Cons Loss, Cons Profit, and Average Hold period makes you comfortable doing said startegy.. you are no longer a gambler.
Its consistency that will make you profitable in the end. But being consistent is the barrier that needs to be practiced over and over again in every trade you make.
What kind of strategy do you use? And if you aren’t comfortable sharing that, then how might I implement what is taught in this video. I am new to trading and anything will help. Thanks!
@@lichling8071Imantrading is a great channel to go to just to learn how you should go about developing a trading edge and the right mindset to have
Never truly understood “gamblers fallacy” until this video. I would follow my system and if I noticed I would win 3-4 trades in a row. I would try to make sure my 5th isn’t a losing by moving my stop to break even randomly, expecting a loss to be due. Now I know each trade is actually independent.
Thank you for clarifying this!!
Nope. By doing it, you may loose big profit streaks also. it works both ways.,.,.
You have provided more value than any other self proclaimed trading out there. Kudos. Love this video.
definitely the best actual, practical trading advice i've ever heard on youtube, subscribed
Excellent video. This is trading, yet 95% of traders rely on "the perfect entry". Once I accepted that my methodology has a 45% (often less) win rate, and hold out for my 2.55+ r/r trading became more systematic. It took years. Great comment on fixed r:r vs dynamic. A dynamic r/r leaves too much room to change your mind.
Thanks for sharing your experience, and I completely resonate with your journey. The idea of seeking the "perfect entry" is a common trap, but the real magic happens when you accept the probabilities and focus on the bigger picture. Your 45% win rate with a 2.55+ R
is a prime example of how powerful a systematic approach can be.
In my system, I also work with a win rate around 40% but with a similar 1:2 R
ratio, and it’s been a game-changer. It’s not about being right all the time; it’s about letting those winners run and managing risk effectively. Fixed R
can provide that discipline, reducing the temptation to tweak your strategy on the fly-a temptation that often leads to inconsistency and frustration.
Trading becomes a lot more predictable when you let the probabilities work for you, and you’ve clearly mastered that mindset. Great to see others finding success through similar principles!
@@oraclechallenge Hey bro hows your stats been performing?, I have similar stats but with a 2.7RR
The best video on trading I have ever seen, plainly and experctly explained, the excel sheet, brilliant.
this man just casually dropped the best trading video on youtube
bullshit
Factss
@@wendifx factsss, he is right
The risk reward of 2:1 or 4:1 whatever does not account for the probability that the closer limit will get hit first, the market just need to wiggle to hit something and the stop loss is closer than the take profit which is farther away. So be cautious with the risk reward math without considering probability of which one gets hit a lot.
I use a negative RR and win 95%+ of the time 👍🏼
@@ShowMexicanoyMascan you please explain how and whats your strategy???
@@ShowMexicanoyMasI also use negative RR and it works wonders.
I don’t understand why though, I just have always done it since the beginning instinctively.
@@Santiagoacph It works because of the simple fact that your tp is closer from your entry point. It’s simple math, you obviously have to have a high win rate in order for this to work in the long run 👍🏼
@@rit3xxI open 6 trades aiming for 0.1% each trade and stop loss is 1.5% on FTMO, so if all trades close in profit I make 0.6% and if I lose 1 it takes me about 3 trading days to recover from a loss
So my RR is -15:1 each trade has very high probabilities of winning
I needed to hear this; the best part for me was reinforcing the idea that capital growth is an outcome of a process....and that there will be aberrations - like winning and losing streaks - which should not get to one's head; the Gamblers' Fallacy is very insightful....I had never considered this earlier. Thanks 👍
Very helpful. I'm about 1.5 years into trading and I only recently started basing my position sizing on getting my risk of ruin (where ruin = 30%ish drawdown) to 0.5%, using forward-testing data only from my live trades. Takes time to get the data, but I started with a win streak which meant I could technically risk 5% per trade lol. Better to project it forward and keep collecting data though since it has already fallen (more so due to trading errors though). My numbers still support 5% risk for the time being but if I keep making trading errors they won't. Then I can adjust weekly. It's insane how I spent like 10K on a course and coaching in the beginning, and they literally have the most mouth-breather idiot position sizing strategy possible, just telling you to trade a certain number of contracts and slowly work your way up each week as long as you're winning (1, 5, 10 etc.), not even teaching about adjusting position sizing based on stop invalidation etc... lot of harmful BS out there in the trading education space.
I want to get into trading. How should i start and what would be good sources to learn from?
Thank you so much, dear Matthew!
This is my third attempt at getting into trading. Until now, it felt like an unsolvable puzzle, but this time I truly wanted to understand it. Then I came across your video “The MATH OF WINNING in trading,” and everything finally clicked. After studying it closely for the past four days, I feel a new sense of clarity and confidence.
Your explanations, your voice, the pacing, and the structure of your content - everything comes together perfectly. As an IT professional, I need systems and clear approaches, not vague interpretations. You gave me exactly that. For the first time, I truly understand what trading is about - maybe not entirely yet, but I’m on the right path.
Your blog also deeply inspires me and gives me the courage to keep going. As soon as I achieve my first successes in trading thanks to you, I will dive joyfully into your courses. I’m sure they are just as amazing as your videos. Thank you from the bottom of my heart for your valuable content, your passion, and for showing people like me the way.
I’ve found my mentor - I love you too, Matthew! ^^
Appreciated content. Grounded and neatly explained from multiple angles, both conceptually and mathematically. Thanks!
As someone who watched a fair bit of videos on trading I can confidently say that this one is of the highest quality there is. Thanks for all the pieces of advice!
Absolutely fantastic video. Best part is the simplicity with which you’ve explained. 🙌🏻
I found this incredibly valuable. Two very expensive causes didn't have anything on this and the first lead me to take trades with 2% risk without knowing any of what you said and without a 40% win rate. These days i do 0.5% but now i know what to do to test of i can handle 1%, especially after pine coding my stratefy. Thanks for this video!
It’s mental. Being profitable requires a mid level skill (very doable), and the right mentality. Your psychology is losing you money.
Where do you take the confidence to say being profitable is mid level skill? Im just curious why do you think that.
@@zetro8870 because the fear of opportunity makes it at that you are not profitable, for example the vast majority of people have a part of them that are scared to enter a trade when their system tells them too, but they either take it too late or they just miss it and stress about it and press themselves and those mistakes grows that misconfidence. Because trading has such a free dynamic built in it, it makes it very unnatural for your brain to create your own rule and respect it no matter what ! and if you take in real life context ( family problems, financial problems and etc) the greediness to resolve your problems with money sometimes takes the best out of you and you lose. ego, self discipline is actually a hard thing to master because even if you think you are doing the right thing, well actually you do sometimes still cross the boundaries in a moment of adrenaline rush, and all those elements combined together will impact your trading inevitably. theoretically trading isn't that hard, there is plenty of things harder than that but it is the one thing that takes you the closest to gambling if not well done and so the feeling aswell. (I'm profitable) and I can say all my friends have the same level of knowledge as me in theory, but most of them haven't understood the concept of really mastering your emotions.
@@zetro8870 so if I have to tell you how to be profitable in one sentence : understand your fear, use it to gain confidence by having a positive mindset at all times ! Fear and Confidence are the key words, you need to eliminate that Fear and let opportunities flow how your theory is based on.
@@zetro8870I know it’s not the same because it’s a demo account and it’s slightly different to the real market, but I started studying and operating a demo account on August 5th this year and today is September 1st.
I did almost 3000USD on my first month.
I just used mostly 1,5 lotes and very conservative risk management.
I have low level skill but I approach it with a very cold mindset and being very conservative.
Time will tell if I blow the fuck up of my account when I use real money but as of now, I feel it’s 80% psychology and 20% skills.
@@zetro8870there are 1000 of strategies with 70% winning chance but still people loose money but a robot with same strategy will make money
Thank you, I've learned more from you in the last 30 minutes than any other trading video. I am 69 yrs old and have become wealthy by investing over the last 40 yrs. Presently, I am very heavily invested in gold, silver, and the miners. I have several trading systems that I have adapted from known successful trend following systems. I lost a lot of gains in 2014 because I was heavily weighted in oil. I trade to educate myself so I won't have any severe draw downs this late in life. My trading account is less than 3% of my liquid net worth.
I have learned that picking the correct investment category; real estate, stocks, bonds, commodities, precious metals, is the more important than picking individual instruments in each category. Different categories perform better in different times.
My frustration is that even though my trading system has a good total return and low drawdown, It barely beats buy and hold for precious metals and stock indices. Both are up about 20% ytd. My question to you is: What total rate of return can be expected from a good trading system. I have heard 30% per year is reasonable. The "Turtles" had a few 100% years. Could you please shed some light on this subject. Thanks.
if you use leveraged bull bear certificates you can easily achieve 300% per year
There isn't such a thing as a trading "strategy" that holds up over time without bad streaks. That's because the market changes over time and previous patterns disappear and reappear as it changes. I.E periods of trendy movements are followed by consolidation and pullback, but you can't really know for certain if you're trending or about to reverse until that's in hindsight. Buy and hold on stocks with tailwinds is the easiest strategy to run. Trying to craft a winning trading system requires constant research and analysis, which is really quite hard to do unless you're a professional finance professional doing this full time. Renaissance had over 30% returns a year for decades, and they're the best in the world. The returns would be higher if they weren't managing billions in AUM, as the size decreases the number of higher, easier probability trading opportunities. Good luck!
This is gold! I remember this channel from a while back, I learnt TV pinescript coding from you to make my trading systematic and backtest my trading logic. A big thank you!🙏🙏
You are the first person to whom I have subscribed, someone who speaks as if am speaking to myself. Of the lakhs of videos there are hardly 8-10 videos ever worth watching. This is one of them.
I had problem comprehending trading in general. I tried watching other YT trading channels, but they made the concepts more complicated. I was almost giving up until when discovered your channel. I love the way you break down the content and explain everything in detail. The videos are easy to follow
The best video on trading. This is how one becomes successful in trading! Subscribed and saved this video for future reference. I need to rewatch this every year. Thank you!
The cat summarises everything I want to be and I am putting it on my vision board
Boring?!
I dont want it to stop! This is pure gold! 😎
I
This is hands down one of the best trading videos I’ve ever seen. Amazing work brother.
a trailing stop loss using atr is a must. you lock your profits
What do you mean by that? Like changing the risk/sl every time based on atr that day?
Once I reach my 1:3 ratio target in profit, I am locking in profit with trail sl and leaving the trade to run
@@olalekankeshinro7129 how fun it is
You are making money using trailing SL and I am making money using a fixed target.
@@olalekankeshinro7129🤦♂️
This is one of the best trading videos i've ever watched.
Amazing dude, one of the very few educators in this field, definitely subscribed and suggest others to do the same who's looking for a legit, no bullshit information. Pure math and REALISTIC expectations outlined, no bullshit, no fake promises.
Hello From India And Lots Of Appreciation For This Video Amount Of Quality In This Video I Can't Describe It With Words This Is The True Trading Principles ❤
Thank you for the spreadsheet, much appreciated
Great stuff, really helped me attach meaning to some of the metrics I've teased out of my back testing.
TY for the Excel sheets! I knew the formula but have always been too lazy to make a spreadsheet😂 At least I now prove mathematically why I win or lose! VERY HELPFUL! I am sure tomorrow's trading will be better!
❤
Amazing content, this is the type of material that will bridge the gap between a struggling trading and finding consistency
This is perhaps the best video on trading psychology. Watching from India...
This was the best video about trading I ever seen..
I can't lie, I'm a financial engineer and I wouldn't quite consider this as the "math" behind trading rather "a small statistic overview of day trading"
Excellent content. Although I beleived is the philosophy, but this video helped me in reinforcing my beliefs with solid arguments; especially the google sheet is really helpful. The market is a random walk, only a system with edge, back-tested for at least 1000 trades with established win rate and clear RRR is the key to sucess.
One of THE best video I've ever watched !
I'm so glad you took the time out of your schedule to make this gem for us. I'm a new trader who's just understanding that psychology and risk management is the most important part of the game. I would love if you could make more videos like this and give tips on trading psychology. Much love from Jamaica 🇯🇲
I think I just found my new favorite TH-cam channel. Thank you for the video, very well done and surprisingly entertaining.
I’ve been trading for about 6 months. Had beginners luck grew my account quick and blew half of my profits. Sized down and kept learning. Now I have a solid strategy I make money consistently. I grew my account back to where it was. The key is to not over size on trades. Better to take smaller gains than taking big losses. I’m putting money from my paycheck into my account and just growing it slowly and with time will increase my size once i have enough to do so. MANAGE RISK!
excellent. This and price action rules are by far the best trading concepts one can learn
I love this video. I'll be referring anyone that wants to start trading to this after they start testing their strategy
I’d love your take on how Chaos theory applies to markets as I know a few people who thing that price is completely random and site statistical theories as to why it is and how TA is a worthless way to trade.
Thanks for the video!
Man! This video is a gem. I love your spreadsheet man, it is perfect for giving us a perspective on the statistical aspect of a trading system. Thank you so much sir.
Excellent video. I think this is an extremely important part of trading most struggling traders overlook.
Appreciate you taking the time to make great content on the subject.
Forget about trades, I finally came across a westerner who looks 34 when he is actually 34. Otherwise almost all westerners look 55 when they cross 30.
😂
I'm sorry, what are you again? Are you racially profiling people?
I look my age in black and white too 😂
@@James-lq1po only us is the judge there haha
The food chemicals and more
Thank you for sharing this video. I thoroughly enjoy it, and thanks for some of time-tested nuggets of wisdom in dealing with the Markets with our emotion in control.
I think this is the realest video about trading. Me thinks the issue is most of the starters think they will just come to take "FREE MONEY".
If you're risking 30% of your actual capital on a single trade, you're not managing risk.
If you hedge you actually can just stop losses faster
Drawdown doesn't mean on one trade, he was talking about losing streaks
This is the best trading video it change my mind about trading before this i uses trail SL and SL breakeven blah blah but now i use only fixed risk reward ratio with a high win rate and guess i am making money
The best honest video about trading... You earned a subscriber...❤
I just stumbled upon the best video about trading. It's practical, based on math and facts, and there's no BS at all.
This kind of video should be shared more than the unrealistic stuff you casually see on social media just to sell courses or whatever. Salute!
I can also see in my backtested data that the ideas presented in the video are realistic.
You have given a concise summary of trading in a zone and better
Thank you. Without question, anyone who is struggling with trading or understanding why a trading plan should be used (win or lose), for a period of time to build consistency, should watch this video.
Excellent video. Every trader should watch this to have a better understanding of how probability affects trading.
Thanks, that was all explained really well. I’m going to check out the spreadsheets - I’d definitely be interested in the TradingView backtesting episode. Cheers.
Trading view backtesting is dog shit. FXreplay better
this is genuine information that is rare on youtube in trading section at least thankyou for sharing your wisdom
i can see this video 5 time in a row😀
Pure gem and factual. Thanks for the knowledge. Especially on the draw down probability.
I don't know what to say.. guess that only lefts me with a really BIG thank you! The way you articulate is easy to the ear. And the effort you put into this clip. it really helps man. Pls keep up the work.
This list of resources is incredible. Thank you for the informative video and everything else you included 💚
Gamblers fallacy doesn’t really fully apply to markets. Assets do have a tendency to revert to the mean, making the odds of the reversion play a slightly better bet in severely overbought or oversold conditions. That being said, things can stay overbought or oversold for a long time. Sometimes
To add more complexity, strong stocks have a tendency to get stronger, weak stocks weaker, continuation bets have better odds than the coin flip, but eventually the asset runs into the laws of large (or small) numbers, the over extension gets ridiculous, and other actors in the market are highly motivated to cover shorts or sell longs. In short; nothing gos in one direction only forever
Seek to own shares of a good company at any price... I have a buy in amount then buy every day at a reduced set dollar amount anything under 3% profit. I then sell at 25% profit. I also have a cap on how much I allow for total cost basis on any one stock.....
It's one of the best videos any trader should watch.
I don't comment often, but this video has the potential of transforming a trader from a loser to a winner.
Appreciate you sharing a part of your real life journey. The video I feel is definitely made for the traders who are serious and have a passion or a goal to understanding how to be successful in the world of trading eventually investing as well.
Thank you so much...was definitely great food my trading soul. Cheers and talk soon...maybe 1-day. Peace from Seattle, USA
Really great video! Probability is sometimes complicated for me. The example with 10 losing bets on black in a row doesn't make the 11th more likely a black. However in my head, the overall chance of 10 red in a row is higher than 11 in a row, so its more likely that 11th will be black.
Great stuff, Trading 101, been looking for this kind of deep-dive probability-blast a long time --- should be required viewing by all traders starting off. Dread Monte Carlo!
I'm subscribed! Thank you for the valuable video for the community.
This video is the key to success in stock market. A must watch!
My question is how does this change with investing vs trading? When you are investing in a company that has fundamental value vs trading a technical edge.
This is my favourite trading video.
as a poker player, losing streak or downswings are what makes you or breaks you
the mental game is so important when you are in a downswing.
the best way to explain newbs the math is just with the roulette wheel, the casino does not win all the time nor do they care how much or when you are betting. every time the ball lands they make 3~% in the long run.
with the gamblers fallacy what about money managers that like to implement winning strategies or assign more risk capital to strategies coming out of a draw down. Is that different and if so why? I would guess because it's a series of trades and not a single trade?
very very interesting!Lost of traders start to make a strategy based on risk management that most of the time is not put in place as it should be. Great video!
Thank you very much! How wonderful September will be when having a knowing …..
Beautiful, realistic, down to earth.
This is the type of videos that every trader should watch, even from time to time, to go back to the notes from a video like this. To keep your grounded.
Thanks for this simple yet profound video.
What I been understanding so far no matter the probability you should look at each trade as 50/50 (just an opinion) I’ve had so many ahh ha moments it’s ridiculous just to see me lose not saying i wasn’t expecting to lose but i wasn’t expecting if you get what i mean what I understand now is you can’t stop loses but you make them smaller i get out of trades faster now instead of it hitting my full SL And also did my research on probability the more you bet the bigger the losing streak can grow it’s ridiculous the chance you have of losing so many in a row even with a 70/ 80 win rate you will reach a big losing streak at some point and there are to many variables to include especially in probability and after so many bets and the losers aren’t uniform so you can’t predict the next loss or win tbh all you can do it reaact and go off feeling tbh to stay above water or you’ll break even or lose to much or not win enough I’m not saying guess but if you win or lose you wasn’t right or wrong but I hedge now it’s making me feel better so far
Dammn, too much value in this short period of time, thanks man ! 🤠
All my testings showed the same result as this video, also from my end the lower the win rate the higher the long term revenue.
Bottom line is any system will work if you have the emotional IQ and technical dicipline
OK, lets face something squarely on. As traders we are all risking money on the uncertain outcome of price action. By definition that makes us GAMBLERS. All of us. AND THAT'S OK. You said in the video that being a smarter trader has made you a smarter gambler. True, because you are betting smarter on price action you are getting constant practice on betting smarter generally, and that translates directly into smarter betting in any other game of chance. And make no mistake, trading is a game of chance. Consistently profitable traders have learned to gamble intelligently, rather than recklessly, ignorantly, or adictively, and to do it with sufficient consistency that they can afford to do it professionally and make their living at it. It's fine to tell non traders that you are a trader or investor because it sounds more respectable, but let's stop kidding ourselves.
Would you consider the casino gambling whenever they allow someone to bet against them (the house) on one of the games? Most people would say that the casino isn’t gambling because the odds are stacked in their favor. It’s no different for profitable traders. Profitable traders are the casino in the markets they trade. I have multiple trade strategies that have been throughly backtested on over twenty years of data (which this process is a science within itself). I know the odds of winning for each strategy, how much money is at risk and how much I will gain for each trade in the strategy. Yes, just trading some random trade setup a few times is gambling, but systematic backtesting with the mathematics supporting the profitable trade setups and systematically taking every single trade for that strategy is not gambling, that’s science. To people that doesn’t understand the science and mathematics involved does look at it as gambling.
Then also dont drive a car or bike etc because you are gambling your life some percentage to accident
Liked for the thumbnail.
Thinking in bets is a great book for psychology on trading in particularly why your choices are actually pre developed
Wow, this blew my mind. Here is a fantastic example of the shortcomings of English language. The coin toss and the events rarity as a coin continues to land on heads would both be referred to as chance, probability, rarity, and likelihood. However one of them holds constant universal weight that is unwavering, while the other, though still a probability for lack of a better word holds absolutely no weight in the outcome.
It’s almost meaningless in contrast of the other, yet refers to the same event. This is something that would be difficult to teach even in school, and is PROBABLY why the irrational thought process exists to begin with. One would assume a more sophisticated language might take this weighted measurement into account.
Thanks for the new outlook, now back to being ret*rd.
One of the better trading videos in this murky realm of YT inhabited by mostly furus, thanks
Great video dude.... I was in a losing streak but knowing that it is completely normal gave me confidence 💙
Great explanation an explanation on discretionary trading vs systematic trading would be great
Yep, best video about trading on this app.
Great video Matthew. An extremely important topic very well explained. Big fan of your work.
I get it, the market doesn’t care, and I totally agree with you on that. But what I can’t quite explain is how, no matter what strategy I try, I always seem to end up breaking even. This has been my experience with everything I've tried over the last 2-3 years. It’s almost as if the market is determined to balance me out.
So, this is my trading phycological question, is that I can tolerate the losing streak trades, but I cannot bare those trades which goes halfway and end up lost. is it better to move the stop loss to breakeven or just leave the stop loss there? which is better? because this will affect the win rate. hope you can make a topic to explain this. Thank you in advance.......
This video is so good that I'm using it to teach my coders!
"You are not due to for a win" "You are not due for a loss". 💯 I'm guilty of thinking like this. Especially in my last week's trading.
Best video ever on trading analytics
One of the best trading vids ive ever seen
amazing video. just had 5 red days in a row and i needed this. taking the long weekend off and hopefully i can come back stronger next week.
There's a random distribution of wins and losses for any variables that define an edge.