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Version 1.1 by Drunk Monkey on 2020-11-20 15:55
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3 ICT: Okay, folks, welcome back.
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7 This teaching is going to be specifically dealing with
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11 considerations and risk management. This module hopefully
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15 will be a little bit more of a sober reminder about how we
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19 should be looking at risk and how we can manage risk to
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23 survive and have longevity in our trading. Alright, maybe
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27 you had this in mind when you first got into trading After
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31 all, the guy that sat down with you before told you, hey,
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35 this method is so good. You risk 10% of your equity. It's
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39 going to make you money. Okay, if you have equity balance of
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43 $10,000 you're gonna risk 10%. Now the first loss you assume
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47 Guess what, you just took a $1,000 loss. Okay, system says
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51 continue risking 10% So what do you do? You get anything you
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55 take an X ray, bang, you hit with an IR loss your equity Now
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59 sits at $8,100. Three losses, hit with another $810 loss,
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63 bang your accounts not $7,290. This goes on for what could
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67 easily be seen in anyone's trading eight string loss, eight
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71 string loss. That is absolutely realistic guys, I don't care
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75 how good a trader you are, you're going to get this upside
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79 your head one day and you need to be prepared for it. If
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83 you're going to risk 10% of your equity simply because you
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87 think you're going to be hitting it on the next trade and
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91 you've been in drawdown, there's a psychological impact that
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95 traders go through. And we more or less deny the technicals
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99 that may be indicating that we're in a trade it's not going
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103 to pan out, but we won't let go of it. We start arm
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107 wrestling with the market because hey, you know, we're going
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111 to be right and it's gonna feel so good when we are and we
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115 can give the middle finger To be crude to the screen, it
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119 cuts at the screen. You say I got you, I got my money back.
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123 Everybody wants to have that stuff, you get that feeling of
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127 conquering the market and beating the guy that you took the
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131 money from the last time everybody wants to go into the
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135 endzone, slam football down and do their victory dance and
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139 all that. But that doesn't work in this business. And
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143 they'll hand you your head on a platter. If you give them
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147 the opportunity to take your money, and a lot of it, they're
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151 going to be more than happy to take it from you. If you just
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155 take an eight loss streak here and your equity of $10,000
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159 your account drawls down $5,217 that's 52% 52% folks, do you
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163 think you can take eight trades in a single week? that week,
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167 some of you guys on these forums trade. This could happen in
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171 a day. Now, I'm not saying that most of you guys aren't risk
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175 that are risking 10% you know, but there are people
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179 neophytes that come into this business and think they're
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183 going to do it. And I'm sorry. But, you know, maybe you'll
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187 come out the gate, make a couple wins and think, man, I'm
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191 risking 10%. And look, it's it's really working out well.
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195 But man, I'm telling you this, that cycle leads to
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199 destruction, right? Just eight trades. Look at this. If you
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203 have eight losses, you're crushed. That's that's a huge
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207 drawdown Not, not to mention the emotional impact and your
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211 mental equity because not only are we trading with real
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215 tangible money and currency in our account, that equity base
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219 is not limited. Use $2 terms. You have an equity amount of
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223 money in your mind what you're really willing to absorb and
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227 risk. You may have put 10,000 on account, but man, you don't
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231 really want to be losing 4000 of it. So what are you really
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235 trading with? $4,000 that's your mental capital. So we're
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239 going to talk more about that when we get into wealth
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243 building money management. But for now, understand that
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247 risking 10% absolutely should be a no brainer for you. You
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251 don't do that. Okay, maybe you're so turned off by 10%. But
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255 hey, you know, you're not too afraid of taking risks to 5%
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259 portrayed is. It's doable for you $10,000 starting account.
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263 Okay, first, last Bang 500 loss. Now your account drops down
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267 to $9,500. You do this for a couple series of losses it the
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271 fifth loss. Okay, now your accounts down to $7,737. But hey,
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275 you're going to make it back and you're not going to bend 5%
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279 risk on every trade. Well, with the standard typical eight
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283 string loss, it can happen to anybody. I'm not saying I had
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287 this once a month. I'm not saying I'm gonna have it three
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291 times a year, but it's going to happen eventually. If you
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295 are in this business at any length of time, you will suffer
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299 a Eight last string, it's going to happen.
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303 If you had the risk of 5% portray starting with equity
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307 balance of $10,000, your equity would draw down to the tune
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311 of $3,016 or 30%. drawdown. Can you can you withstand that?
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315 Can you imagine taking eight trades in a single week and
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319 being drawn down 30% Let me tell you something. I have done
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323 that. I have done that. Okay. And it is absolutely
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327 demoralizing because if you come out the gate strong
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331 thinking yeah, man, I'm gonna, I'm gonna tear it up. Well,
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335 yeah, you're gonna tear it up, right? You're gonna tear up
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339 your account, okay, and you're gonna sit there and you'll be
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343 depressed for the entire weekend. You're gonna move over
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347 possibly adding more money when that's not the answer. The
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351 answer is is controlling the amount of money that you put
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355 up. And controlling yourself is very difficult when you're
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359 in a period of drawdown if you're a new trader. I'm talking
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363 from experience Okay, when I got involved with commodities.
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367 I was trading, you know, five and six, seven contracts of
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371 Chicago portrayed wheat. And really my balance really should
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375 have been working with one midam contract. And I'm not going
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379 to go into contracts and specifications for commodities, but
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383 I'm just saying that I was over leveraging. And the worst
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387 part of it. I knew I was over leveraging. And when I was
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391 losing, it didn't hurt enough. I was going to be right. I
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395 was imposing my will in the market. And I'm telling you, you
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399 will lose doing that. It will hurt you doing that you don't
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403 gain anything from that except for misery and depression.
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407 Trust me, I know. Okay, so 5% risk is absolutely too much.
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411 It's insane. Don't do it. All right. Now let's look at the
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415 typical traders thought going in. This is the standard
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419 mentality of all traders. If you read it on all the forums,
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423 all the book, we all say and I preach it too. Don't risk any
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427 more than 2% per trade. Alright. Okay, we're gonna look at
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431 Trader one up here at the top. Okay. You have One trader,
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435 starting with an equity balance of $10,000. And he's going
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439 to risk 2% per trade, and he runs into the inevitable eight
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443 string loss, it's going to happen. Well, the account draws
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447 down after eight losses $1,318 total percentage draw down
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451 13%. You could probably withstand that. I mean, most traders
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455 could absorb that. Certainly new trades because they're in
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459 and they're invincible, and their events are going to be in
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463 the next streak where they make 100% accuracy. So this is
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467 absolutely, you know, within the realm of comfort for most
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471 people, if they have a 10,000 equity balance, and they only
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475 draw down, you know, 1300 bucks, most people can absorb
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479 that. But let's flip the script for a moment. Look at Trader
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483 two. Okay. He starts with $10,000 and he's starting with 2%
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487 risk. Watch what happens is first loss at 2% is $200.
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491 Suddenly, he has a problem. He has absorbed a loss.
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495 Something's going to take place in this traders mind that
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499 didn't take place in the first traders mind. So his next
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503 trade, he only loses $98. But it's still a loss. So the next
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507 trade he takes is what? A loss of $48 look at just after
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511 three losses, the difference in terms of equity. Where are
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515 we at? Essentially in the same neighborhood, but look what
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519 happens over the period of the eight losses trader to after
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523 eight string loss. His account draws down $538 total
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527 percentage drawdown 5%. Do you see a difference there? What
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531 do you think trader two did differently that trader one
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535 didn't do. Number one, he identified the fact that He's not
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539 perfect. He identify or she rather and definitely the ladies
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543 that are watching this Sorry, sorry, gals. The second trader
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547 here in our case study when he absorbs a loss, okay, he only
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551 takes one to do this the first loss immediately he cuts his
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555 risk in half. So no longer is he risking 2% so now he has
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559 drawdown at $200. So he risks on the next trade. When his
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563 account equity is at 90 hundred dollars. He's going to risk
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567 1% portrayed. Now, he assumes $1 loss. Does he stay at 1%?
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571 Absolutely not. What does he do he drops down to one half of
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575 1%. So it's next trade. He has lost $48 and 51 cents.
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579 Guys, you can take that. If you got 9700 in your account and
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583 you can lose $48 you can lose 50 bucks. You're not losing
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587 sleep over that. If you could lose if you lose sleep over
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591 that type of loss with the equity balance of 9007 hours.
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595 Stop trading. It's not for you. Go Go bet at horse races and
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599 you know, play lottery, something like that. But I'm telling
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603 you, you have to assume some kind of risk. You know, this
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607 goes along with everything that's been discussed in the
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611 beginning of the disclaimers. I mean, you have to understand
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615 you're going to lose money in this business. And if you're
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619 not comfortable with losing money on a consistent basis
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623 where you're not perfect, bottom line is stop trading. Okay,
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627 I have losses, you're gonna have losses too. I can't teach
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631 you how to trade perfectly without losses. No one can,
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635 you're not gonna be able to find it. And if that's the Grail
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639 you're looking for, it doesn't exist. Trust me. It doesn't
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643 exist because I'd pay everything I have for and it's not
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647 there, trust me. So let's keep this train rolling here.
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651 Okay, after he drops his equity risk to one half of 1%.
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655 Okay, and he has another loss, the fourth loss, okay. $48
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659 and 27 cents. While he takes another loss. He stays at one
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663 half of 1% look what happens at the end of his eight losses.
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667 He's got a huge amount of his starting equity still at his
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671 disposal, and he suffered eight losses, he hasn't had one
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675 winning trade yet. Now contrast that with trader one. This
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679 guy, he's down 1300 bucks. trader two, he's only down $530
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683 to 5% drawdown is absolutely tolerable in any one trading. I
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687 mean, you're gonna you're gonna suffer 5% Good grief 5% You
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691 know, that's it you're trying to make in a day some some of
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695 you guys that are trading, you have to control your risk.
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699 Okay, if you have a loss, cut your risk. If you have another
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703 loss, cut your risk trade and drop down to one half of 1%.
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707 Now if you have five or six trades, then you've lost that
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711 half 1% drop it down to a quarter percent. Okay, whatever
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715 suits your risk appetite. That's what you have to do, but
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719 you have to go the other way. You do not You do not average
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722 00:12:02,040 ~-~-> 00:12:05,160
723 down loads you don't take well I lost 2% mean risk for now
724
725 182
726 00:12:05,160 ~-~-> 00:12:07,500
727 because if it all it takes is one trade and I'll make that
728
729 183
730 00:12:07,500 ~-~-> 00:12:11,160
731 back and maybe even make the 2% and I was hoping to make on
732
733 184
734 00:12:11,160 ~-~-> 00:12:14,850
735 the previous trade that lost, or I only have to make, you
736
737 185
738 00:12:14,850 ~-~-> 00:12:17,280
739 know half of what I lost in terms of pips in the last trade
740
741 186
742 00:12:17,280 ~-~-> 00:12:19,530
743 if I was fortunate, don't do that, guys. I've done it. I'm
744
745 187
746 00:12:19,530 ~-~-> 00:12:22,650
747 telling you, I've done it. Granted, I'll give you this and
748
749 188
750 00:12:22,650 ~-~-> 00:12:25,830
751 I'm gonna be fair. There's been times where early on, I did
752
753 189
754 00:12:25,830 ~-~-> 00:12:28,080
755 it, and it worked out in my favor. But when I tried it later
756
757 190
758 00:12:28,080 ~-~-> 00:12:30,360
759 on, it crushed me and it never gave it back to me. It took
760
761 191
762 00:12:30,360 ~-~-> 00:12:32,760
763 more and it took more and it took more and I'm telling you,
764
765 192
766 00:12:33,090 ~-~-> 00:12:36,690
767 it is a loser's game, trust me. I know this by firsthand
768
769 193
770 00:12:36,690 ~-~-> 00:12:40,890
771 experience. It never pans out over time. Doesn't happen.
772
773 194
774 00:12:40,920 ~-~-> 00:12:43,440
775 Okay? So just don't do it. If you have a loss, cut your
776
777 195
778 00:12:43,440 ~-~-> 00:12:50,610
779 risk. Cut your risk, cut your risk. Alright. Now let's
780
781 196
782 00:12:50,610 ~-~-> 00:12:54,090
783 assume let's stretch this out a little bit. Alright. trader
784
785 197
786 00:12:54,090 ~-~-> 00:12:59,310
787 one had a drawdown of 1300 dollars. Okay, one, eight losses,
788
789 198
790 00:12:59,550 ~-~-> 00:13:02,970
791 not one trade was a winner. All eight were losers. Well look
792
793 199
794 00:13:02,970 ~-~-> 00:13:06,990
795 at Trader two. Let's assume for a moment the guy hits. He's
796
797 200
798 00:13:06,990 ~-~-> 00:13:09,630
799 got a bad run, you know, he's got some problems in his
800
801 201
802 00:13:09,630 ~-~-> 00:13:13,470
803 personal life in 95 getting him, you stressed out his boss
804
805 202
806 00:13:13,470 ~-~-> 00:13:15,810
807 is driving and crazy. You know, he's rushing trades. He's
808
809 203
810 00:13:15,810 ~-~-> 00:13:19,230
811 not following the system. He's not feeling well. He's
812
813 204
814 00:13:19,230 ~-~-> 00:13:21,840
815 spending too much time in the forums and not really studying
816
817 205
818 00:13:21,840 ~-~-> 00:13:25,080
819 the charts. It's something that's keeping him from being
820
821 206
822 00:13:25,080 ~-~-> 00:13:29,070
823 disciplined, okay? He's not hitting on all four on all
824
825 207
826 00:13:29,070 ~-~-> 00:13:31,830
827 cylinders. Something's wrong. Maybe he's got a system
828
829 208
830 00:13:31,830 ~-~-> 00:13:34,560
831 doesn't work. Maybe he's a bank, he hasn't abandoned his bad
832
833 209
834 00:13:34,560 ~-~-> 00:13:38,340
835 habits. Bottom line is is he's not made a profitable trade
836
837 210
838 00:13:38,340 ~-~-> 00:13:42,600
839 yet. Look what trader two can absorb. He can absorb three
840
841 211
842 00:13:42,600 ~-~-> 00:13:47,160
843 times the amount of loss that trader one can. Following the
844
845 212
846 00:13:47,160 ~-~-> 00:13:51,330
847 same approach, the first loss, risking 2% the only draws and
848
849 213
850 00:13:51,330 ~-~-> 00:13:54,990
851 the 90 hundred dollars. Second loss, risking 1% now because
852
853 214
854 00:13:54,990 ~-~-> 00:13:58,200
855 he's trained back to his risk, he only loses $98. His draw
856
857 215
858 00:13:58,200 ~-~-> 00:14:02,400
859 down goes to 90 $700 In his account, now he's at one half of
860
861 216
862 00:14:02,400 ~-~-> 00:14:08,070
863 1%. And he stays there. Okay, all the way through up to 24
864
865 217
866 00:14:08,070 ~-~-> 00:14:12,240
867 losses, this gentleman or young lady could have a loss
868
869 218
870 00:14:12,300 ~-~-> 00:14:17,280
871 string of 24 losses and still be less than the first trader.
872
873 219
874 00:14:17,760 ~-~-> 00:14:24,210
875 Think about that. This guy or gal can have 24 losing trades,
876
877 220
878 00:14:24,690 ~-~-> 00:14:29,190
879 and still have lost less than the first trader on a trade
880
881 221
882 00:14:29,700 ~-~-> 00:14:33,450
883 because he didn't augment his risk exposure.
884
885 222
886 00:14:34,080 ~-~-> 00:14:37,800
887 You have to control the amount of risk in your account. If
888
889 223
890 00:14:37,800 ~-~-> 00:14:41,550
891 you do not do this, no one's doing it for you. I can't do it
892
893 224
894 00:14:41,550 ~-~-> 00:14:43,800
895 for you, your wife can't do it for you. Your husband can't
896
897 225
898 00:14:43,800 ~-~-> 00:14:46,320
899 do it for you, your kids can't do it. The broker certainly
900
901 226
902 00:14:46,320 ~-~-> 00:14:49,260
903 ain't going to do it. Okay. So you have to have this in your
904
905 227
906 00:14:49,260 ~-~-> 00:14:52,680
907 plan. It has to be mounted on the wall tattooed on your
908
909 228
910 00:14:52,680 ~-~-> 00:14:55,020
911 hand, it's got to be on your forehead. So when you see
912
913 229
914 00:14:55,020 ~-~-> 00:14:58,170
915 yourself in the mirror, you see this all the time, control
916
917 230
918 00:14:58,260 ~-~-> 00:15:01,680
919 risk. I can't stress it enough. Nobody talks about it enough
920
921 231
922 00:15:01,710 ~-~-> 00:15:05,070
923 in you have to do this, you absolutely have to do this.
924
925 232
926 00:15:05,250 ~-~-> 00:15:08,580
927 Okay? This will give you the the Viagra effect not to be
928
929 233
930 00:15:08,580 ~-~-> 00:15:11,550
931 crude, but it gives you the staying power, you have to be
932
933 234
934 00:15:11,700 ~-~-> 00:15:15,090
935 able to absorb losses. So I'm telling you these banks,
936
937 235
938 00:15:15,180 ~-~-> 00:15:17,880
939 they're ruthless, as good as my methods are I still get
940
941 236
942 00:15:17,880 ~-~-> 00:15:21,390
943 slapped around sometimes, okay, it's going to happen. Now,
944
945 237
946 00:15:21,810 ~-~-> 00:15:26,040
947 granted, when we dropped down to half a percent, okay, we're
948
949 238
950 00:15:26,040 ~-~-> 00:15:28,200
951 not probably going to make a whole lot of money coming back
952
953 239
954 00:15:28,200 ~-~-> 00:15:31,590
955 out of it. Sure, that's fine. But there's a, there's a
956
957 240
958 00:15:31,590 ~-~-> 00:15:36,510
959 strategy that we're employing. That goes a long way in terms
960
961 241
962 00:15:36,540 ~-~-> 00:15:41,910
963 of a profitable career. Okay, if you can absorb 24 losses
964
965 242
966 00:15:41,910 ~-~-> 00:15:46,500
967 and only have 12% drawdown, you're controlling risk. There's
968
969 243
970 00:15:46,500 ~-~-> 00:15:49,980
971 not a trader out there. Okay, that can beat their chest and
972
973 244
974 00:15:49,980 ~-~-> 00:15:53,220
975 say, I've been trading for five 810 years, okay. And I've
976
977 245
978 00:15:53,220 ~-~-> 00:15:56,100
979 never had an eight string loss. Okay, I'm telling you that
980
981 246
982 00:15:56,280 ~-~-> 00:15:58,890
983 they don't don't that's a unicorn, they don't exist. Okay.
984
985 247
986 00:15:58,890 ~-~-> 00:16:02,040
987 So you're going to have strings losses. I'm showing you how,
988
989 248
990 00:16:02,460 ~-~-> 00:16:05,220
991 even with a na, I've never had 24 losses, I'll give you that
992
993 249
994 00:16:05,220 ~-~-> 00:16:07,920
995 I've never had that string of 24 losses, but I've given you
996
997 250
998 00:16:07,920 ~-~-> 00:16:11,910
999 a shield. Okay? I've given you a mindset when you step out
1000
1001 251
1002 00:16:11,910 ~-~-> 00:16:14,730
1003 in that arena and risk your capital and you risk your money.
1004
1005 252
1006 00:16:15,330 ~-~-> 00:16:19,650
1007 This is your only defense, this right here, okay? It's not
1008
1009 253
1010 00:16:19,650 ~-~-> 00:16:22,800
1011 the trade signals. Okay? It's not the amount of money you
1012
1013 254
1014 00:16:22,800 ~-~-> 00:16:25,500
1015 put in the account to start with. It's the amount of money
1016
1017 255
1018 00:16:25,500 ~-~-> 00:16:28,740
1019 you put up. Because whatever you offer them in your hand,
1020
1021 256
1022 00:16:28,770 ~-~-> 00:16:32,640
1023 open palmed, they're going to take it if they can. So if you
1024
1025 257
1026 00:16:32,640 ~-~-> 00:16:35,010
1027 give them a large percentage of it, all you're doing is
1028
1029 258
1030 00:16:35,010 ~-~-> 00:16:39,990
1031 enticing more interest in taking it from you. Okay, so the
1032
1033 259
1034 00:16:39,990 ~-~-> 00:16:44,610
1035 moral of the story is, if you have a loss, cut your risk, if
1036
1037 260
1038 00:16:44,610 ~-~-> 00:16:46,710
1039 you if you have a loss, again, you cut your risk and you
1040
1041 261
1042 00:16:46,710 ~-~-> 00:16:51,960
1043 drop down to one half of 1%. Okay, and you stay there until
1044
1045 262
1046 00:16:52,350 ~-~-> 00:16:55,950
1047 we have a turn in equity. And when you start making money
1048
1049 263
1050 00:16:55,950 ~-~-> 00:16:59,310
1051 and start being profitable, okay, there's a way to going
1052
1053 264
1054 00:16:59,310 ~-~-> 00:17:02,070
1055 back to do your Original risk exposure, say your maximum
1056
1057 265
1058 00:17:02,070 ~-~-> 00:17:05,460
1059 risk exposures 2%. betrayed. Okay, how do we, how do we
1060
1061 266
1062 00:17:05,460 ~-~-> 00:17:07,920
1063 compensate for that? How do we get back to that? That point?
1064
1065 267
1066 00:17:08,160 ~-~-> 00:17:12,150
1067 Well, let's talk about that. Now. How do we, how do we go
1068
1069 268
1070 00:17:12,150 ~-~-> 00:17:14,070
1071 forward with this information? Okay, well, when we
1072
1073 269
1074 00:17:14,070 ~-~-> 00:17:16,530
1075 experience a loss, the first thing you want to do is number
1076
1077 270
1078 00:17:16,530 ~-~-> 00:17:19,320
1079 one, reduce risk. That's the absolute first thing you think
1080
1081 271
1082 00:17:19,320 ~-~-> 00:17:21,480
1083 in your mind not let me get back in and try to get my money
1084
1085 272
1086 00:17:21,480 ~-~-> 00:17:24,630
1087 back. No, you cut risk. Why? Because you already have a
1088
1089 273
1090 00:17:24,630 ~-~-> 00:17:27,480
1091 state of mind where you feel you're victimized, okay, I
1092
1093 274
1094 00:17:27,480 ~-~-> 00:17:30,360
1095 don't care how long you've been trading losses still haven't
1096
1097 275
1098 00:17:30,420 ~-~-> 00:17:34,230
1099 had an impact. Okay? I don't like losing. I hate losing.
1100
1101 276
1102 00:17:34,320 ~-~-> 00:17:37,740
1103 Okay. Because my method wins more than loses. When it
1104
1105 277
1106 00:17:37,740 ~-~-> 00:17:40,920
1107 happens. I don't like it. Okay, but I don't beat myself up
1108
1109 278
1110 00:17:40,920 ~-~-> 00:17:43,650
1111 about and going into, well, you know, I lost $500 I'm gonna
1112
1113 279
1114 00:17:43,650 ~-~-> 00:17:46,800
1115 get in here and trade, and I'm gonna try to make $2,000 on
1116
1117 280
1118 00:17:46,800 ~-~-> 00:17:48,960
1119 the next trade because I lost five. I want to get four times
1120
1121 281
1122 00:17:48,960 ~-~-> 00:17:51,630
1123 as much money back I'm gonna do it in half the time. I don't
1124
1125 282
1126 00:17:51,630 ~-~-> 00:17:53,880
1127 think like that anymore. I did. I'm gonna give you this. I
1128
1129 283
1130 00:17:53,880 ~-~-> 00:17:56,460
1131 did think like that years ago, but I don't need to do that
1132
1133 284
1134 00:17:56,460 ~-~-> 00:17:59,040
1135 anymore. Okay. And you don't need to do that. Now. If you
1136
1137 285
1138 00:17:59,040 ~-~-> 00:18:02,340
1139 haven't adopted that. bad habit, this is hopefully keep you
1140
1141 286
1142 00:18:02,340 ~-~-> 00:18:07,530
1143 from doing it. So, if you take a loss of 2% the next trade
1144
1145 287
1146 00:18:07,620 ~-~-> 00:18:11,940
1147 you will only assume 1% risk. Now, should this trade result
1148
1149 288
1150 00:18:11,940 ~-~-> 00:18:16,110
1151 in a loss, the next trade will only assume one half of 1%.
1152
1153 289
1154 00:18:16,800 ~-~-> 00:18:21,870
1155 Okay, you will only risk one half of 1% portrayed until you
1156
1157 290
1158 00:18:21,870 ~-~-> 00:18:26,160
1159 have made at least 50% of the draw down of the equity dip
1160
1161 291
1162 00:18:26,490 ~-~-> 00:18:29,640
1163 from the trade risking 1% of equity. Okay, so, in other
1164
1165 292
1166 00:18:29,640 ~-~-> 00:18:32,550
1167 words, the trade that you lost when you're risking 1%,
1168
1169 293
1170 00:18:32,550 ~-~-> 00:18:36,150
1171 whatever that amount is, let's say it's 500 bucks, you need
1172
1173 294
1174 00:18:36,150 ~-~-> 00:18:40,590
1175 to make $250 risking one half of 1% before you can trade up
1176
1177 295
1178 00:18:40,590 ~-~-> 00:18:45,630
1179 to the 1% risk portrayed here. Okay, now you're going to
1180
1181 296
1182 00:18:45,630 ~-~-> 00:18:50,130
1183 risk 1% per trade until you make at least 50% of the equity
1184
1185 297
1186 00:18:50,130 ~-~-> 00:18:54,960
1187 dip that you used when you risked 2% per trade, okay? So
1188
1189 298
1190 00:18:54,960 ~-~-> 00:19:00,960
1191 again, if you're risking $500 when you're risking 2% At 1%
1192
1193 299
1194 00:19:00,960 ~-~-> 00:19:03,840
1195 risk, you need to make at least $250 before you go back to
1196
1197 300
1198 00:19:03,840 ~-~-> 00:19:07,320
1199 risking 2%. If you lose, you go back to that system again,
1200
1201 301
1202 00:19:07,320 ~-~-> 00:19:10,530
1203 you drop cut in half, cut it in half cut in half. And now
1204
1205 302
1206 00:19:10,890 ~-~-> 00:19:14,040
1207 you have an opportunity to step back and say, Okay, I can
1208
1209 303
1210 00:19:14,040 ~-~-> 00:19:16,350
1211 take some blows, I can get knocked around, but I'm not
1212
1213 304
1214 00:19:16,350 ~-~-> 00:19:19,080
1215 getting taken out of the game. Okay, so now hopefully,
1216
1217 305
1218 00:19:19,320 ~-~-> 00:19:24,690
1219 hopefully, with this presentation, you can breathe. There's
1220
1221 306
1222 00:19:24,690 ~-~-> 00:19:27,390
1223 a way of doing it, guys, okay? And this is how it's done.
1224
1225 307
1226 00:19:27,660 ~-~-> 00:19:29,850
1227 You can't stay in this business without controlling your
1228
1229 308
1230 00:19:29,850 ~-~-> 00:19:33,750
1231 risk. That's the moral stick to the game plan, stick to the
1232
1233 309
1234 00:19:33,750 ~-~-> 00:19:36,600
1235 method of controlling risk using this approach, and
1236
1237 310
1238 00:19:36,600 ~-~-> 00:19:40,410
1239 absolutely guarantee, okay, you want the Holy Grail. This is
1240
1241 311
1242 00:19:40,410 ~-~-> 00:19:44,010
1243 the Holy Grail. This is it. You have to have a shield in
1244
1245 312
1246 00:19:44,010 ~-~-> 00:19:47,010
1247 this business. If you don't, your money is going to come to
1248
1249 313
1250 00:19:47,010 ~-~-> 00:19:49,680
1251 me. It's going to go to the central banks. It's going to go
1252
1253 314
1254 00:19:49,680 ~-~-> 00:19:52,200
1255 to the guys that know how to do this, okay, because I'm
1256
1257 315
1258 00:19:52,200 ~-~-> 00:19:55,230
1259 going to be in the game years from now, you know, and I'm
1260
1261 316
1262 00:19:55,230 ~-~-> 00:19:57,450
1263 going to still apply this approach when I have losses. This
1264
1265 317
1266 00:19:57,450 ~-~-> 00:20:00,510
1267 is how I do it. This is what kept me in the game. As long as
1268
1269 318
1270 00:20:00,510 ~-~-> 00:20:05,010
1271 I've been, it's gonna be a concept that I hold closest to
1272
1273 319
1274 00:20:05,010 ~-~-> 00:20:08,250
1275 me. Because this is more important than my entry signals.
1276
1277 320
1278 00:20:08,610 ~-~-> 00:20:12,120
1279 This is more important to my access. This is the absolute
1280
1281 321
1282 00:20:12,390 ~-~-> 00:20:16,200
1283 key Cornerstone to long term success in careers in trading.