NBB Trader on swing trading, automation and controlling risk

0:00I'm going to say something controversial just off the bat. The worst thing to a person's trading is themsel. It's not the strategy. Most people don't have a strategy. They think they do. If you ask them what is your defined strategy, they will start I do this. Oh yeah. Also, if this ask me my strategy, day trading, yeah, simple. I need to This trader turned his early trading failures into six figure prop firm payouts. But according to him, his strategy was never the reason that he actually became profitable.

0:24Today's guest is Omar and we unpack why most traders fail long before they even click buy or sell. I think most people don't know how to swing trade. They think I don't mind adding one or two swings a month. I swing trade today. I've had over 150 trades this year. Don't tell me swing trading has a low frequency. I realized like look, I'm good. I can read price. But I came to the realization if I can't handle the risk. I'm always one losing streak away.

0:45And a losing streak is inevitable. You're always going to be one losing streak away from blowing up. Your loser streak needs to be We discussed the right way to back test. We talk about how to think in probabilities. He shares his insights on how to manage draw down and we discussed why automation might actually be the future. I can sit on FX replay for 3 hours and I can go through 2 years of the market.

1:03How fast can you go on a demo account or live account? You can only go one day at a time. Personally didn't do all that practice. They're going to figure it out as they go. That is is a disaster in my opinion. It's a disaster. You know what is the one of the most toxic things? Yeah. And the SMC community is mostly to blame for this.

1:20This episode isn't about finding a magical setup. It's about learning how to treat trading like a professional instead of a gambler. A lot of strategies have edge. The worst thing to a lot of strategies is the person and automation removes the person. I haven't placed a trade myself since February.

1:34So, all you want to do if you want to code your strategy, the entire thing is Let's get into it. One thing I have seen about you online before we've had the good opportunity to meet is you're someone that is very keen on the idea that your edge in the market isn't just technical. So I want to know if we were to hypothetically give your strategy to a thousand traders, how many of them do you think would actually make money?

1:57If we're talking the majority, you got to go by the stats. Majority won't be able to know what why is it that you think that's the case? Like what is it that holds people back from making money? It it's because the strategy has edge, right? But the person, you know what is I'm going to say something controversial just off the bat. Go ahead. The worst thing to a person's trading is themsself. It's not the strategy. Rarely it's a strategy issue.

2:26If you think about blowing accounts, it's never really the strategy. Um people don't blow their account like a 100 trades loss in a row. I don't think that's even possible even with like a losing strategy just how probabilities work out. It's usually some sort of like emotional ruin. You lost revenge traded leverage more leverage and then accounts gone inside of like a short span and a few trades usually how that's how accounts get put to bed. Is that something you ever went through?

2:53Yeah. How what like what was your journey with that and how did you start to find the other side? So when you're a new trader it's it's very normal as Also, like if there's a new trader watching this, it's it's it's very normal cuz it's the rush to making money, right? Especially when you don't have like um if you don't start with like um the capital that you want to you try to treat like small capital but make big boy returns. It's it doesn't work like that cuz you need to like 10x 20x your capital like to do that, right?

3:19So, for me, I was just uh trying to chase a number. I was chasing a number that and that's what that's I think that's what it stems from chasing a number and you lose you don't like the loss you go in it's it's just like I said it's emotional ruin you're just wrecking it yourself and you know you're just taking your anger on your account however else you want to put it and that's how the account goes you will do it a few times until you just kind of get sick of it cuz you see it's not going to work um I was actually good I was I picked stop trading quite well.

3:55I feel like academically I pick things up quite well. I understand it. It was really up my street as well trading. Yeah. I realized like look, I'm good. I can read price. I can engage in price and I can go on like winning streaks as well. But I came to the realization if I can't handle the risk, I'm always one losing streak away from trading. And a losing streak is inevitable. So then by default, inevitably, I will always blow this money up if I can't control the risk.

4:23It it's it's just that simple. Like to me at least. Yeah. So you find that if you put the focus initially on controlling the risk, it helps with the emotion coming out. I think a lot of problems in psychology, right, in trading, it comes from just being underprepared. A lot of people, they're not ready to trade live funds. And the thing in trading is this. You how easy how anyone can go buy a prop firm challenge. Anyone can go and sign up to a brokerage.

4:50There is no uh test. There's no litm test to put funds anywhere. They they want your money, right? If there was a uh a test where you have to show like simulated trades, your strategy, speak to someone before you sign up to a broker and they deny you or they accept you based off you you're ready to trade, the stats will look completely different.

5:09It's because anybody can go into the industry and have a go. Like for example, a person if we take them off the street right now, they deposit into a broker, they blow their account and they quit, they'll become a number in the in the statistic. But do you not think a person like that screws the data? I believe they screwed the data because you know they just came in had one go and they quit. So yeah, I agree um with what you said.

5:34So how you I mean I like what you said there that most people fail because

5:40they're underprepared. Given your experiences going from having those early struggles to then finding some success and then now even teaching other people how to almost replicate that. If you were to give someone a guide on how to become better prepared to take on the field of trading and investing in the markets, what would you say to them? First, you need to understand what trading is. It's it's that simple. What is trading and understand is is it for yourself? Trading is not for everyone like um you know like uh combat sports is not for everyone.

6:07Like it it takes a certain like like roughness or you know what I'm saying? So first understand it's trading for you. Don't get socialized into it. naturally you know if it is naturally you know if it's not. Don't let anyone peer pressure you into trading. Right. And then understand everyone rushes to the entry. So they rush to the end.

6:29Yeah. But you need to understand the like foundations like the difference in trading styles. What okay so now okay you you decided you wanted to trade now you should discover the types of trading scalping swinging day trading. Which one kind of suits you more? I people should explore the three, but you need to know the difference between the three. Like people don't even know if they're scalpers or day traders like at this point. So, and then it's just all about taking some effective content like uh you know there's loads of content out there now.

7:01YouTube is a whole different place from like 5 years ago when I first started. When I first started, by the way, you know, like SMC was like um there was maybe like 10 videos with the title SMC on on YouTube. Right. Now it's like everywhere. Yeah. So then it's just about taking effective content. Effective content, you don't need to reinvent the wheel. You can literally just take effective content that people have used beforehand, study it, practice it. At that point, it's just very boring.

7:24It's just so it's like going to the gym. You you pick up a uh like um a program, a split, whatever you want to call it, a diet as well. And it's just committing to that and checking if you're making progress on the scale, if it's visually in the mirror, however it is, right? It's the same thing in trading. So, you take up the effective content and then you're learning and you're practicing in simulated uh in a simulated scenario, right? Obviously, there's going to be like um your own pract like so p you see back testing is as well is it's such a there's a lot of layers to back testing.

7:59Back testing is not just practicing entries. Back testing needs to be replaced with just practice. So, if you're a new trader and you're practicing to find fair value gaps, for example, that is a back test. go and back test. Identifying fair value gaps. Identifying price patterns is a form of back testing. Back testing is not solely tied to going on like a a simulated uh like a simulator FX replay trades or whatnot and just trying to find trade setups.

8:26That's the last bit. Once you understand the fair value gaps and all of this, how liquidity, you know, is, you know, like running a high to go run a low and these type of things, however, whatever technicals it is you use, once you've got it into a plan, then you practice it. Do you want to skip the long evaluation process and get straight to funded? Because Tradeify actually gives you that option.

8:46Traderify Futures is one of the most trusted prop firms in the industry. They paid out over $125 million to their traders whilst operating consistently for years with stable conditions. And here's the big thing that most traders care about. They have no hidden rules and no denied payouts. If you hit the objectives, you get paid. It's really that simple. Tradeify also have really flexible plan choices. You can pass an evaluation in as little as one day. They have daily payout options. And if you want to skip the evaluation process entirely, you can go for instant funding.

9:17With instant funding, you can start trading funded accounts immediately without having to go through the evaluation. Account sizes go up to $150,000, and you can control five of these, meaning your total capital could be $750,000. With this, you can also request your payout every 5 days. But this is where things have taken a step forward. Tradeify have just launched Traderify Elite Live. This is a brand new live trading program with a performance reward pool. This means you can earn extra rewards on top of your profits with up to $90,000 available across multiple accounts.

9:50And here's the key to this. You unlock those rewards by trading profitably for 5 days and keeping your profit above your draw down. So now you're being rewarded for consistency and not just big wins. They've also introduced new plans with a much lower barrier to entry. You've now got options like the select 25K and the growth 25K. Whilst the price has been reduced, they've kept features like their flexible and daily payouts and even 1-day pass evaluations. On top of that, there are no more subscriptions.

10:22Everything is a one-time purchase only. You now get instant dashboard automations, which means if you pass your evaluation on one big move, you don't have to wait around. You can activate your funded account immediately. And in terms of platforms, you're not restricted to any one choice. You can now trade across Trader of 8, Wealth Charts, Rhythmic, and even Tradec as potential options.

10:42So, if you're looking to get an account, make sure you use code PFT at the checkout. The link is in the description below. Let's get back to the episode. But people just jump from, okay, I want to I want to scalp. This is the model and let me just have like 10 trades on a on a simulator. Okay, I'm ready now. Let me go and try a propform challenge. The way we do it, right? Like inside inside my community, we will do probably minimum five intense sessions.

11:14Okay. Minimum. I'm saying closer to eight. Yeah. And the first one is 30 and then each one after that is an interval of 20 trades. Okay. Yeah. Or 15 trades, sorry. And what that does is it it creates a feedback loop. So use the first 30 and that's the broad plan and then the 15 is just with small improvements. So okay this was bad maybe consider this consider trade management in the next one consider going for uh how to go for runners in the next one.

11:38So incrementally you you get better right as you digest more content whatever it is just naturally you progress but this needs to be measured too because in your head you might be thinking you're getting better but you need to measure that progress. It's like you might think you're getting leaner, but you might not be if you're not if you're not tracking that progress. You see my point? It's it's it's very anything that you can track has a big carryover. The gym in in trading, if that's how fast you're running, whatever it is, right?

12:07And then all you got to do at that point, yeah, is transfer the practice into real time. Now, of course, yeah, people going to say you don't get psychology in the back testing. Back testing is not for psychology. is to find edge. This is the thing. We're not back testing. No one no one says that you back test to to to condition our psychology. I would even say though, you don't even need to trade to condition your psychology.

12:33You can condition your psychology from things outside of trading. I did that personally. I understand. I I learned probabilities. I looked at how uh poker players uh play with risk and whatnot. That taught me risk management more than anything in trading. Yeah. So, back to what I was saying, all that person has to do now is just replicate what they're doing in simulation now. And all they got to do is trade now in real time and just handle the risk.

13:00That person is just copy and pasting that. The person who didn't do all that practice, they're going to figure figure it out as they go. That is is a disaster. In my opinion, it's a disaster. I resonate with so much of what you said there, especially like on the back testing front.

13:16We've had I mean even like guests on the show and I'm not saying people are right or wrong. I think there's, you know, thousand ways to skin a cat, but we've had a lot of people that will debate the idea that back testing is pointless. And I'm not saying you can't be profitable without back testing, but it it's just so much more efficient to find your edge in terms of time, right?

13:36Why wait for a 100 trades to play out live when you could just back test them? Let me build on that. Yeah. Yeah. You know, back in the day, we didn't have this trade seller and this FX replay. It's you open a demo and you go as slow as you're going to go on the live. So, at that point, yeah, maybe a small live account that you can afford to lose is better.

13:52But now, you're telling me, yeah, FX Replay, and I've done this with hundreds of people. Yeah, FX Replay, I can sit on FX Replay for 3 hours and I can find and I can go through two years of of of the market. Yeah. How fast can you go on a demo account or live account? You can only go one day at a time. You are going to progress many many times faster than doing a live account. 100%. It's it's a no-brainer.

14:21You're going to get your data as fast as possible. If you go to anyone that collects data and they tell you, would you rather get a day by day or would you rather just get your data like very fast. They're going to say, I will they'll pay you money. They'll say, "I'll pay you money this one year that I got to do this study. I What's your price tag? I I want I want I want to know the result.

14:41Now that's how serious that is. Yeah. There you use the analogy of like health and fitness and it's weird. I use the exact same way to describe it, right? The same the way I always put it is when people say back testing is pointless. I always say it's like saying bicep curls are pointless cuz they don't give you abs. It's the wrong exercise for the wrong job. Just like you said, back testing is not for your psychology. It's for edge. That's exactly what we're trying to do, right?

15:05We're just collecting data to prove that you have positive expectancy over time. And you know how much better your psychology is going to be when you see edge like your actual edge, right? A lot of people they don't have, you know, by the way. Yeah. So all these things Yeah. I'm like a I I I look into all of this stuff in my spare time. Yeah. So a lot of psychological problems is the fear of the unknown. We're we're naturally humans. We like comfort. We don't like to engage in new things or you know like um try new things whatever it is.

15:35Yeah. So a lot of fear majority of it comes from the fear of unknown. Now in trading there's only really two psychological errors. Fear or greed. Everything is probably branches out but it's fear or greed. Yeah. Mainly it's fear. Greed is a isn't a lot of people's problem. It's it's it's fear right. So, if you haven't practiced enough, you're going to have a fear of the unknown because you don't know how that setup plays out many times.

16:00You don't know over how many trades what your performance looks like. Do you have a actual positive expectancy or is it a negative expectancy? Now, if you know that the fear of the unknown kind of goes, you're going to get jitters, whatnot. This, you know, it doesn't it doesn't totally go over time as well. Like, you'll have the same emotion. You'll learn to control it better. But someone that's practiced they and they've done it the right way, they likely won't run into these psychological issues than someone that has put off and just uh skipped to the queue.

16:34And you know what the hardest reality is? The people that skipped one day you're going to have to go back. So you might as well just save the time and just go back as fast as you can. Yeah, I completely agree. You you said

16:51something there which is I I think very important which is even if you do the foundational work and you collect the data to help you with that fear of the unknown, you're still going to have moments in time where you get those jitters, you get scared, you get slapped about by the market, you start questioning everything. Even if you've done the right things and you've built that foundation, in that moment when you're still feeling fear, worry, anxiety, whatever it is, what do you think is the best advice on how to deal with those moments specifically?

17:17I'll give you something. Yeah. Me, I get I still get pissed if I take like a it's a loss, but I give an example of the loss here. It's it's just it's kissing the profit to take profit and and it's happened quite a lot this year. This year has been quite a bit of a different uh environment in the market because you know back in the day markets are moving off of straight data and you know like reports. Now it's moving off of tweets.

17:47It's a whole different time, right? So we've been getting reversed on like um late night because when Iran speaks it's it's not in the same time zone as us and whatnot. So yeah, I get pissed. But the thing is this. Yeah, I've seen look outside of trading. Yeah. Everyone has seen what anger can lead to. You don't need to see and go into okay is anger also going to lead to something bad in trading.

18:10It's going to lead to something bad in trading. If it's if it's a road rage, if it's if it's an argument with someone, it's going to anger is going to lead to something bad categorically, right? So, if you still get jitters, one thing you can do is this. Yeah.

18:26And I think it's one of the most underrated things. If you have a problem with risk, yeah, use just use a risk EA. Just use a risk EA. And there's so many out there. It's been a thing for for years and years before I've even started to trade. Probably even before you started to trade. Risky years have been around. Yeah. And all that does is you it connects your your account and you put in the risk that you want to put.

18:46So whenever you you trade it, it fixes that risk for you. So what that does is if you have an overleveraging problem, it won't let you overlever. It's a really hard cap. Like it's a it's a thing where like you know you have a serious issue, you should just um and that's what's holding your edge back. you should um I really recommend a risky EA. Now, if it's someone that you're scared and whatnot, you kind of have to understand where where's that stemming from.

19:12So, again, it might be this. Yeah. It might be someone that's prepared. Uh I have a video on this actually. It's like um there's really three main root causes. Yeah. Fear of the unknown. Uh and the other main one is you're probably trading funds you're not ready to trade. Now, you don't need to jump to a six figure prop account immediately. It might be the, you know, the the fluctuations in the P&L.

19:37As much as people say, you know, don't watch P&L. Look, I watch my P&L sometimes, time to time. Everyone, I I I'll switch from the P&L to the chart, the chart to the PL. Look, all these people online that say you can't watch, look, trading, I even know guys, yeah, guys that have done very well in trading, they get a kick out watching their P&L go up and down.

19:51They love it. But the thing is this, they're so conditioned. It does, it means nothing to them. it's just they're just watching it and they're not acting on it. So before you can get to that stage, size down or you don't necessarily have to size down the trade or just start smaller with um let's say you can afford I say to people, can you afford 100K challenge?

20:12Okay, then you can definitely afford 50K. Start at 50K. 50K is not bad. You can afford 50K. Start at 25K. 25K is not bad. This doesn't need to be the first and only prop firm challenge. It's just somewhere to start and naturally just let the conditioning of your psychology and it's not really I wouldn't even call that psychology. I'd call it more uh just experience, right? Cuz you you know you know what you're doing.

20:38You you might be a little bit scared and that might be tied to the numbers. So just size it down and naturally you build that risk tolerance. I started small capital account right a few thousand pounds and then as I was trading proper small I was trading a bit more money I was trading at the time was like what a 300k account from trading a few thousand right but because it was incremental and I just didn't jump to 300k that 300k challenge I first started 100k challenges and then a 200k then I merged them if I traded straight to a 300k challenge that's quite the jump from the numbers I'm kind used to seeing.

21:10It's like you're used to going 30 miles per hour. Now you're driving 100 miles per hour. This is going to scare you. But going from 30 to 50 to 70 to 100, you don't realize that now you're at 100. It's it's it's the same in trading. Incremental changes even in the gym, you know, jumping from a 60 kilo bench to 100 kilo bench is quite heavy. 60 to 70, 70 to 75, 80, a bit of plateauing around 80 to 90, then 100, you're going to like, wow, I made all that progress.

21:44But if I I had to just do it in intervals. It's the same with trading. Yeah. You know what? It's it's wild. I feel like we're almost the same person. I literally One has one doesn't have. This is your future, bro. I I genuinely use that exact same example with bench press. Oh, and and I I promise you, I say to people, I was like, even if you've been practicing your bench press for like 3 or 6 months, and you go from 20 to 40 and then 40 to 60, do you think, "Oh, I've been at this 6 months.

22:11[ __ ] it. I'm just going to jump from 60 to 100 now because I've committed 6 months." You don't do that. Your body is not ready. Just the same way your mind is not ready. And I think the problem that most people don't account for in the prop space is your account size can scale so much quicker than your mind's ability to handle it.

22:33And people don't account for that. And that's where I think a lot of people start to screw up. So I completely resonate with everything you said. Um there's one bit I want to cycle back to when we were on the topic of draw down. I love what you said about it again. Completely resonate. I feel like I'm just talking in the mirror at this point here, but I speak to a lot of traders that get stuck with this dilemma where let's say they go through an extended period of draw down, which can happen, right?

22:53Depending on your approach, on your strategy, on your ability to adapt to maybe different market conditions that can maybe stretch out for a period of time. How do you know the difference between like let's say a normal period of draw down and a strategy that just may not work anymore? So basically like a a variance issue. Yeah. In draw down. Okay. Cool. So people that don't know what a variance issue is. Every single trade strategy before we say that your hit rate is not as high as you're going to think it is.

23:25Now I I made a I I have a content around that. Yeah. Myself. Yeah. Myself my hit rate over a long period of time is probably I said a bit over 50%. People might say that that's [ __ ] It's not [ __ ] You don't I'll tell you something. Give or take 50%, 1.6R, not even a high R. We're talking 1.6. Yeah. And just a lot of frequency, you will make money guaranteed.

23:53Yeah. As long as you have enough frequency for the sample size to play up. Now, um, with draw down, so if it's a variance issue, variance issue meaning, look, these are trades that your system is going to pick up. It's trades that your system is going to pick up and that's fine cuz every system is going to go through that. Now if it's a you know like a different an outside of a variance issue right it's problematic. So I'll give you an example here I at the start of the year I had um a good run in the precious metals platinum right I then traded the silver my idea was silver's going to rally you know it's all going to kind of get going so I I went into platinum platinum rallied very hard but let me tell you something I went for a runner and I round trip a lot with that money.

24:39Yeah. Now my system says to take profit at the 2. I was quite a bit over 2. If I sucked to the system, I would have won in and out a few times. Yeah. But instead, I roundt tripped most of it. I I came up with like under two R in the end of it. Right. So that's a me issue. So if it's a U issue, you have to understand are you your trade for your system, right?

25:04All you're trading is for the equity curve and not for yourself. And it's the hardest thing to do, right? Now a lot of this again it goes back to the data and why it goes back to the data and a lot of them show a lot of good things. So your max draw down period is something you should know. Your max draw down period meaning you know like over your large sample size of trades that you do.

25:24Yeah. When we say sample size let's put a number to it. I say at least 100 minimum 100. I'd say look here 200 is when it starts getting a bit more clear. Yeah 200. And people say 200 trades is is a lot. It's not. You can do 200 trades. Yeah. someone that has a system, you can go and find 200 trades in a week of doing simulated testing. Now, if they say the frequency, I don't have that frequency, look at more markets.

25:47This is another issue people have. But anyway, go back to Jordan. Yeah. First identify is it variance? If it's variance, it's fine, right? Meaning, you know, like really that trade I'll take every single time. So, when someone comes and brings me a loss, like what you know, how did I lose it? I say look here everything was met. They everything was met. Are you really surprised you lost? Bro, I can't believe I lost. It's a vance issue. That's the easiest way to identify.

26:11Are you really surprised that that trade lost? Yeah, it's a varance issue and it met all your criteria, it's a varance issue. Now, if it's because you're changing the plan and whatnot, this is a problem and you don't know where that's going to take you because your data was off your plan. And anything now that you trade outside of the plan, you have no data for it. You you don't know. Um I'll give an example. We flip a coin assuming 50/50. Now, we change the weight of it a little bit to one side.

26:34It's a whole different game at this point. That's what people are doing. They're adding the weight to one side of the coin now when they when they start to do this freestyling thing. I hate the freestyling thing. It gets me so mad when I when I see it. And um so now you're just in the dark and you're just if you're staying in the dark, it's only so long until you're going to fall on your face.

26:51Yeah. So one thing is draw down is normal. And the same way you get into draw down is the same way you get out of draw down. Funnily enough, there's nothing you really change, right? The same trades. And this is the benefit of a riskreward system. The whole point of a risk to reward system, yeah, is whatever damage you make can be recovered in less. So 2R should recover it in half the time or half the trades that it took you to get into draw down, right?

27:16So you you you lost two, you win one, you're out of draw down half the time. This is the whole point of risk-to-reward. Now this is this is it in trading. You need to balance the risk of reward with the right risk because the risk, right, you're going to go through an inevitable draw down. Just a just a quick statistic. Yeah. In a sample of 100 with anything over 100. Yeah. With a 50/50 win rate, you'll take an inevitable 6 to7 losing streak.

27:39Now, people's win rates are not as high as they think. They think it's 50 because they had a great week or they had a, you know, a great month where, look, some weeks, yeah, some months I was untouchable. I don't there's been months where I didn't lose. Obviously, as a swing trader, the frequency is a bit low, so it's not too telling. um some some I couldn't get anything going. So from 90% to maybe 20% hit rate while we averaging out like 55 there.

28:07So over large sample size you're going to be you're not going to be that above 50 as you think right? You're going to people probably closer especially noob they're closer to 3040 if we're honest they're probably closer to 3040 now we're 3040 win rate you have to understand this here what are you risking because you're going to go into draw down it's fine draw down's not a problem right given that it's some sort of systematic draw down with a variance issue look there can be a bit of [ __ ] that creeps in as long as the [ __ ] is kept to 5% it's fine yeah now The same way you're going to get in that draw down is the same way you're going to get out.

28:43Nothing changes the same trades and you have to understand just let the the risk reward get to work. Now, you should risk at a level where you can sustain a consecutive losing streak and still have equity. This is people's problem. A losing streak is probably the end of them. It's the end of the account. You're always going to be one losing streak away from blowing up. Then, your losing streak needs to be recoverable, right? So, you you can lose five trades. Yeah. and is recoverable, that's good.

29:14I'd say even 10 trades should be recoverable. Uh especially when you're trading a personal account, you know, these things are a bit different. You can't just go buy another personal account and you have to go deposit more money. If you're failing other people's money, they're not going to like the sound of that. Like they're going to, you know, you might burn a bridge that you didn't want to burn, right? So yeah, withdraw down. As long as it's a variance issue, it's all coming from the plan.

29:36As long as it's not overlever, right? As long as you didn't you you're not overleveraging and you're not freestyling that draw down the same way you got into it with the same trades you got into it you should be able to get out of that draw down with less trades than that got you into it unless you freestyled and used uh excess leverage so by default what you shouldn't do don't use excess leverage and don't freestyle out of the plan I I think again spot on.

30:08I I think you're you're hitting the nail on the head with everything there. the the big part for me is I think most traders don't understand what normal variance looks like for their strategy and that's the problem and it goes back exactly to what you said earlier which is it feeds into that fear of the unknown and a lot of that can be counteracted by having that foundation having data understanding statistically what is normal for your strategy because if you don't have that foundation and you start trading and you hit three losses you're like [ __ ] my strategy broken the best way to see variance is you know when we studied GCSEs For the people in the UK, you know, when you do like a line of best fit, not every dot is on that, right?

30:50There's some dots that aren't on there. Now, what can you do? You can't do anything. You have to draw the line of the best fit, not curve fitted everything. So, naturally, you're going to miss some. And that's fine. That's that's the best way to understand what variance is. Like the line is what you're trading, right? This is your trading strategy. you're hitting most trades and the dots that aren't on the line away from the line, you know, these are just various issues.

31:15You can't do anything about it. You can't meet all of them. 100%, man. Um, I want to cycle back to something that you touched on a little earlier because when we were talking about

31:25laying out this blueprint of helping people to be better prepared for the markets. You mentioned a big part of that is understanding what type of trader you need to be in terms of how you approach it. You've got scalpers, you've got intraday, you've got swing traders. From what I understand, and I I want you to tell me a little bit more about this. You started off as like a day trader. Yeah. Scalper day trader. And then you've transitioned into swing trading. What was the the thought process behind that?

31:50Okay. So, when you're scalping, Yeah. So, CFDs as well. Uh it's not good. If you're going to scalp, you should scalp futures. It's it's a it's the scalping, you know, environment. So, when you're day trading, Yeah. you're going to, especially for a broker, you'll run into like size issues. So, you might have to grid your trade or something like that. You're going to get slipped on certain lot sizes. Now, day trading for me in general was stressful. It was just stressful.

32:17And uh you know, I spoke to so I have um I spoke to a few traders. I know a few traders that did like quite well. Uh they're not on social media or anything like uh they're like a lot older than me and you. Um and they say they they all started to swing. Yeah. And they're like, "Look, you know, when you swing, like it it's a lot more realistic." So, for example, yeah, you know, people have this backwards mindset of a time window to trade, whatnot, which is fair.

32:48Yeah, cool. But 9 to5 person, you're actually better suited to swing trading because that swing trading is not going to interfere with your with your job. But day trading, unfortunately, that session for most people in the world is going to interfere with your job. So, you know, like in an office job, you're trying to you got work to do, you got manager breathing on your neck, then you're trying to find um a way to like find look at the market. How well can you perform doing that?

33:11You're nowhere near your A game. You're at your Z game. You're in the worst possible environment. Yeah. So, with me scalping, day trading, look, I I'll tell you what it was. Yeah. You use key levels when you're day trading, right? There's still a high time frame focus. like you know I'm trying to I'm I'm using a daily chart and I'm just aligning myself with the daily print. But what I was seeing was a lot of times I'm just getting what people call getting front run.

33:30So my key levels being met and um I'm not getting any retracement and the price is just you know there's this misconception in trading here that entry always comes entry doesn't always come that retracement doesn't come enough that it's not a deep enough retracement market just blasts one way you know like there's this is the reality of trading a lot of it isn't just it touches a level and it goes sometimes price likes to grind right so what I saw and I came to realization yeah was I'm great at picking the right key level.

34:05I'm great at doing that. Why don't I just swing trade my key level? Why don't I just swing trade my key level? Right? I know that I'm going to try find a trade setup here cuz the 4 hours should retrace here. Find a trade setup, day trade here, and ride that move. That trade day trading isn't promised because day trading you rely on confirmations.

34:26So relying on confirmation is like this, right? It's like relying on phone calls and everyone to pick up. Now the more confirmations you have and over confirmation is a big killer to people right because you you know at one point adding a confirmation doesn't add anything to the win rate it can actually draw back the win rate it can draw back the frequency and frequency losing can draw down the equity curve right so I thought why not just swing trade my key levels and that's that's it's it was the simplest change that made me swing trade and again there's it's a lot more forgiving with the scaling because now stop loss size is bigger position size is naturally a smaller um with the lot sizes.

34:57So, it it was it was actually a win-win in both regards. I I felt a a lot better doing it, a lot less stressed doing it. And with swing trading, it's a lot more Look, it has a bad name. Yeah. Because people I think most people don't know how to swing trade right online. They don't know how to swing. They think, "Oh, you're going to find one I don't mind finding one or two swings a month.

35:23I swing trade today. I've had over 150 trades this year. Don't tell me swing trading has a low frequency." Right? So, with swing trading, it's more forgiving to look at more markets cuz you can't day trade multiple markets. Some people going to say you can look, you're going to try and hunt key levels and find confirmations for multiple markets. All I need to do to swing multiple markets is price to come into my key level and I'm swinging that key level. There's no confirmations.

35:48Well, there might be one confirmation like I need like a rejection candle. That's it. And then I'm game. I don't need a whole model to like on like to to form out. So, it's actually more scalable in that sense. I can swing gold, the S&P, I can swing a currency pair. I can swing the other global indices, you know, like the DAX. You can't. But I guarantee you can't day trade all of them on the same day.

36:14It's impossible because it requires too much attention to each market. So I think yeah we we we need to like revolutionize swing trading because day trading gets this you know like this like the glory and day trading is great for example like most people they came up off day trading right but swing trading I feel like it doesn't it's not understood because you could swing many markets look to increase the frequency is as simple as just increasing the basket so let's just use a fair like mathematical conclusion yeah you trade EU and you have a frequency of like one trade a week.

36:47Okay. So, if you increase your basket from EU and two more pairs, you increase your triple your basket, is it fair to say you can at least double your frequency? I think that's a fair thing, a fair conclusion to come to given that they're not super correlated. So, not EU and G. We can class that as one thing. They need to be somewhat not that correlated. So like maybe EU, the S&P and like a cross pair like a AUD pair or something that has a nice high like a reason to trade for example like there's an interest rate differential going in there or like there's some sort of thing like I'll give you an example.

37:14AUD has been great this year because AUD has been hiking their rates a lot harsher than everyone else. So if you look at AUD pairs uh AUD JPY great pair for the start of this year uh oneway market nice easy to trade. Now there might be a little bit of a pivot. So it's kind of uh ranging about, but if you can understand the macros and find an interest rate differential play, you can find a nice prospect to trade for like a month cuz monetary policy lasts for months.

37:42It's not a today we change the rate, we change our mind tomorrow. It's it will be there for like a good quarter, two quarters at least. I think the problem that a lot of people have is when they think about increasing frequency, it's done from a place of they just want to be more active. M they're not thinking about actually increasing edge by expanding their their sample of asset classes but they just think of it as if I'm not in the market I have no ability to earn any money and as a trader I need to be active.

38:10I think another way people do it which I think is wrong is they try to decrease the time frames. So I'll give an example. Yeah. Uh there was a guy um or he's not there no more and um so we typically work off daily 4hour 15minute uh you know like we establish some sort of next daily print and then wait for like um a 15minute like a confirmation like strong displacement a shift in structure whatever you want to call it and then it's just an entry like retracement yeah simple effective and then one guy came to me and said I'm going to changed my direction to the 1 hour candle.

38:49I want to find my key levels on the 15minute and then I want to trade on the 1 minute. I was like, you know what you're doing right now. Yeah, you you you were playing up front. You were a winger. Yeah, you're good at that. You want to play left back now? You're on still you're still on the football pitch.

39:09You're still trading. Yeah, you're still trading. You're still playing on the pitch. Yeah, but you're not left back, bro. You're you're a winger. Do you see my point? That is a whole different ball game that you have no data for. You know what is the one of the most toxic things and I the SMC community is mostly to blame for this. They have taken and exaggerated this idea of price is fractal.

39:30It's fractal for sure. A lot of things in life are fractal. Fractal and practical are two very different things, right? So yeah, try to keep up with the one minute. Most people, yeah, on one good day, yeah, you you probably did trade the one minute, but I feel like most people trading in the one minute. It's a thing of like um the occasional profitable fallacy, like you do good on like a a say said day, a said week, but in the long run, you're giving actually money back to the market.

39:58Now, that's not to say that some people can't do well. I know some people that have done well in the one minute, but do you know these people, they are probably autistic, like not like any fun and games, but these people are seriously conditioned in a different way where the average person is not. And you can't try to be like them because it's just it's it's like literally like a hormonal like they they are literally on the spectrum. Yeah. So you can't even keep up with them if even if you try to condition yourself as much as you can.

40:22Do you see my point? So yeah, that's that's my take on it. Yeah. There's I think a lot of people also underestimate on the lower time frames that and maybe this is just from my perspective. We as human beings, we can only make a finite number of good decisions within a period of time. And you may look at a one minute chart in hindsight and you may say, "Fuck, there was like 10 good trades today that I could have taken."

40:45But do you have the mental processing power to actually execute on all 10 the exact same way? Sticking to your rules, managing risk, getting out of the market exactly the way you should? Probably not. And this is where and kind of pivots me on to nicely for my the next thing

41:04I wanted to talk to you about which is automating your trading. I understand this is something that you're you're moving into or toying with a little bit. I've uh I've alhamdulillah I'm moved into it now completely. Okay. It was uh it was hard finding the right kind of team cuz uh but a lot of learning that came into it. So automating it removes like I said at the start a lot of strategies have edge.

41:30The worst thing to a lot of strategies is the person. Mhm. And automation removes the person unless you manually uh intervene which what I did at the sa was manually intervene. By the way it was automated by itself and I was just trying to I was extending the the the profit as I was going. So I was manually intervening and that was the wrong thing to do and the system showed me I was wrong and I did that for quite a few trades. Yeah. And if I didn't manage and intervene in those trades, I'll be up quite a bit more right now.

41:55So again, who was right? The system who was wrong like ego to the side, hard to solve. I was wrong. So yeah, automation is good. It's um it's good if you have a good strategy. Talk to me about getting into automation. This is something that I've personally like never looked into. If someone is trading some kind of mechanical approach that could be automated, what's the steps that they would need to take to to actually get that in place, you need to quantify stuff.

42:19Yeah. So, you need to move to as many hard rules as you can. Right now, trading in general should have majority hard rules in your plan. There may be some soft rules. Soft rules meaning the discretion type of thing. Yeah. If you're going all off for performance, by the way, yeah, I think you're just um your your your time's ticking because performance decays, right? Performance decays and performance can decay overnight in just the sense of a lack of sleep, right? So, you need to make things into hard rules.

42:55You need to turn vague things into quantifiable rules. I'll give you a very easy example. Yeah. Let's let's say you're trying to work off of a momentum idea. Let's use a nice and easy one. Yeah. The opening range. Yeah. You're familiar with the opening range. Okay. Opening range. Nice and easy. Yeah. So, instead of saying a clean break, that's vague.

43:18What's a clean break to me? What's a clean break to you? What's a clean break to the audience? It's very different. So, we need to put a number to clean break, five points above the opening range, 10 points above the opening range, three points. We need to quantify like that. Work of points and these type of things. It's it's it's it opens your eyes to a lot of things. Yeah. So I give an example.

43:35Yeah. Like um how do people define a dogee candle or a hammer candle? The thing with the long wick and the body on the top. Okay. But if I show different people different uh uh how like changing the wick size. Some people say that's when it stops being a hammer. That's when it starts being a hammer.

43:56So we should quantify these things. So you need to quantify your rules. Yeah. Find a way for a bias. Now bias is very easy and in the quant world it's very accepted that it's a thing and the SMC people going to lose their mind. A moving average get out. You use a moving average. But you know what is I was a I was um when I was a lot uh when I was younger Yeah.

44:19You can probably you can probably find some things where I said moving average is is bollocks. But you know what all a moving average does? Tell me how this is bollocks. Yeah. Okay. Let's say it's a 50 moving average. Yeah. All the 50 moving average does is calculate the last 50 candles and their price and averages that price out of them. What's [ __ ] about that? Like you know like if you're above it, you should look for uh look for longs.

44:42If you're under it, look for shorts. It's the how else can you code a bias? You can't. It's a very simple and it's actually a very accepted and effective way to code a bias. Coding the confirmations is difficult. because source code not a lot of people are code like talented in coding. Claude is great. Uh a lot of AI does it.

45:09You can go to claude right now and say like this. I'll give you an example. Let's just think of something. Um and by the way automation doesn't need to be full strategy. It can be indicators and I say absolutely you can you can automate a lot of your strategy. Uh I have like videos and stuff and automation actually cuz I I feel like it is something everyone should look into once they actually um get to a certain level.

45:29It's not for a new trader. For people that have been trading for some years, they they know like like for example, you've you've fixed cars for years and you just will know like you know if there was something on the market, yeah, I have this issue. If there was something on the market that would make this a bit easier for me, I would buy it for example cuz they've done the job enough times, right? So I'll give an example. Yeah. Why don't I did this discretion first?

45:52So before I met the people that could help me code everything. Yeah. I was just working making indicators easier for myself. So what I was doing was this. I had a spreadsheet. Yeah. And it was previous days highs are no sweeps. So if we swept the previous day's high and had like a really harsh reversal. I think I quantified it at like 80% reversed the other way. No, 75% the other way. Ping it to the spreadsheet. Yeah. Ping it to the spreadsheet. And what I'll do is then the next day should be a continuation of that reversal.

46:21So let's say Euro US struck the previous day's high and then rejected 75% of that that run on the high. Yeah. So it's a it's a big it's a big uh shooting stock candle. Yeah. The next day I'm going to go lower every single time. Right. Likewise, if it was a hammer, I would go long every single time. Right. And that's a form of automation. I automated the bias. I automated to go and look for the market.

46:47I had every single pair, bro. I was getting many pings. But the thing was this, I was getting a lot of pings in consolidation because that's the one problem with code is very literal. So there's a lot of fine tuning uh safety nets put in place for consolidation which is quite I had some problems doing that but we we overcame that. Um that's the only one thing with code that's where like discretion may benefit but it's not the biggest deal and a talented coder can come uh and work their way around it.

47:09So all all you want to do if you want to code your strategy, the entire thing is you want to make as many hard rules as you can and code it. You're going to sacrifice some discretion and that's fine, right? If you can't do that or you don't want to do that, at least make an indicator that can benefit you. I think everyone can benefit from an indicator that tells them the direction to kind of trade in cuz bias is a lot of people's problem.

47:34And then you just have to find confirmations, discretion. Utist you just go in line there. You're long on the day only long on the day. let your discretion get to play there. You're long. You know what you're doing from there, right? It's like giving the push. So, make an indicator like that, like a bias indicator, however you want to do it, right? It could be like I said previously, it's a that's a great one.

47:56If you can add other things around it, like, you know, um outside of a consolidation or whatnot or maybe add a specific day of the week like if it's specifically Tuesday that swept the Monday's high and aggress aggressively close out the way, then Wednesday, Thursday should continue. How much can that help a trader? It does a lot of brain work and if you do it across many markets, it tells you what market has it and what market doesn't.

48:17So, it's an efficiency gain there. You know exactly what market I'm you're not at the the desk anymore because time spent at the desk where you don't need to be at the desk. People make stupid trades, stupid decisions. So, removing that and you know like, okay, I'm going to trade that market. You're basically being told what to do. This market is good for shorts. Yeah, I go short it tomorrow. Okay, then I'm just going to go look for my power three lower.

48:39I'm going to go look for whatever whatever however look models and technicals however you want to do it that does a lot of your trading for you could take it a step further and if there's a confirmation that you can uh code code that too cuz you'll be very surprised there is edge in many strategies yeah it's the person because you may not even know that your trace up is happening in another market because you're not looking there you're committing to the ES it might be happening in gold So, in saying that, there's a lot of efficiency gains with the automation.

49:14How how do you deal with I don't know if this is the right word to use, boredom that

49:22potentially comes with it? Because I mean, I I see traders that trade discretionary or mechanically, but they're the person that clicks the button and they experience boredom if they don't have a trade for an hour or a day. So, I can imagine if you're switching or have switched to an automated strategy, how do you stop yourself from getting involved? I know you obviously touched on the idea earlier in the year you had problems with this yourself. You started to want to override I think you mentioned it was in platinum or something.

49:46Yeah. But is this something that you're you're working on to try and maybe keep yourself busier or I haven't placed a trade myself since uh since I stopped intervening. So February. So yeah, it's quite boring. Like life in general is it's it's quite boring. Like you know people think these traders live a fast life. Some some guys do, some guys don't. My community keeps me on my toes cuz um obviously like uh I've introduced them to automating.

50:14So, you know, some of them are having a go at it. Um and what I do is as well like I I show them how I automate. I show them the trades like the ultimate trades that are being picked up. I'm very I show them all of that, right? And then I show them like this is why what do you guys think of it? And if I'm being absolutely real, they they help me. They helped me because all I did was take my discretionary trades and they pinged it.

50:33I can show you some of the trades after. Yeah. And you'll tell me like that is like how are you picking that up? Like trust me the the guy behind it is the guys behind it are very very talented. Yeah. It's picking up great like setups that people will take themselves like seriously like like it's it's catching like um power threes for example. Yeah, power threes like um accumulation manipulation distribution basically.

50:59It's it's it's picking up quite good trades. Yeah. So, yeah, it's quite boring. Community keeps my toes. I got I do a few things outside of trading. Not really. Mainly outside of trading. I'm just I'm just an investor. I don't I'm not like a hands-on guy. GTA 6 is around the corner. Um other than that, yeah, World Cup right now. Other than that, bro, it is.

51:19So, I I made YouTube now, but bro, I thought it's going to be hard. I could done that in two days. YouTube is automated. YouTube is automated with schedule uploads. So, it's boring, but look, you're not here to trade for fun. Trading is a business. Yeah, business is always fun. Like, um I learned my lesson in that. I tried to do businesses that I I thought like were fun. Like, like like I learned quickly like your business is just a means to make money. And if you want to have fun, find a good hobby.

51:45So, I like to drive. So, sometimes just just drive, go on drives, whatnot. Uh meet up with friends when they when they have the time, visit family, bro. It was just like very boring typical typical stuff. Like the UK doesn't have like shooting ranges and these type of stuff. So if there was like shooting ranges like in Dubai, I like to go to the shooting range. Uh yeah, bro. It is boring. I can't I'm not going to sit here like is very boring.

52:10Yeah. Finding ways to keep yourself busy. It seems like Yeah. Yeah. Fair. Do you do

52:16you find that now that you've gone down the path of automation, you're coming up with a lot more ideas to test stuff? You know, one of the biggest benefits Yeah. You know, that is a great question. I'll tell you why. Discretionary trading, you're capped to probably your model. But, you know, there's a lot of good trade trading ways out there. Yeah. So, for example, um mean reversion and momentum are like the two main ideas in inside of um the automation world. Yeah. So, you have momentum, which is basically like as the market, you're trying to get in line with that expansion.

52:41Yeah. Expansion. So think of it like power three and you're getting in like on a breakout like I'll give you an example you know like a very big model I'm seeing around like online now is like inverse fair value gap as soon as you close through that fair value gap uh enter the open of the that's a momentum idea that's a breakout of the inverse fair value gap right so that's a momentum idea then you have mean reversion mean reversion is in my opinion you know it's the harder one to do but so mean reversion think of like a rubber band the market And S&P is very well known as like a mean revertive market here.

53:18So it expands, it expands, expands and it will snap back into the range with a harsh retracement or something. So these are the main two ideas and then it's like branches off there. So different types of mean reversion approaches, different types of momentum approaches cuz there you can you can approach momentum on many different ways, many different time frames. So you are not bound to one strategy when you automate. Now the goal is this for automation. You don't you want to run uncorrelated strategies there.

53:43You don't want to run very correlated strategies because it's going to go well and it's going to go very bad and you don't want that. You want to run. So mean reversion momentum by nature they're different. One is like a reversal type retracement, one is expanding. So they don't really go they don't really collide together. So the draw down paths are different. Likewise the equity paths are different. But that's good because it's controlled like that.

54:08And then as long as you can find strategies uh like all I did was I I take inspiration from quite a few traders. One trader that I I'm very inspired by is is trader Dante. It's a legend, right? So he he trades this uh I don't know what it is, but I've looked at a few of his things and it's like um I think it's a mean revertive thing with when the ADR is exhausted.

54:26So let's say the ADR is exhausted. You have a really sharp aggressive move that really exhausts the ADR. Let's say it's uh the euro. Yeah. Let's say it's Euro dollar and quick move 60 pips in London. And then let's say you get a confirmation like um like a swing three bar swing can be or it could be just some sort of reversal pattern.

54:50However it is you want to define that. Whatever you think is going to make a reversal pattern. Yeah. And then you fade the move back down. That's a mean reversion. So all these ideas. Yeah. So how coding how coding strategy begins is this creative idea is like a scientific approach. Creative idea it should make sense on paper right like like what I just said it makes sense it should work.

55:12Now what people do wrong with discretionary is they take the idea they don't practice it and they just run with it. If you're going discretion you need to take the idea you need to practice it and you need to do it. If you're going automation you need to take that idea code it. Now this is the biggest benefit. Trading View tester tells you your straight away your equity curve.

55:29You don't need to do the testing. There's no back testing to do. You just need to make the the strategy and you get the equity curve and the equity curve straight away is black and white. It tells you it's good, it's not. It tells you your max draw down and whatnot. Then it's there there's a lot that goes into automation. Monte Carlo systems you need to run that to see like your possible draw down path.

55:48So Monte Car Mont Monte Carlo is basically like deck of cards, your win rate, your riskto-reward, right? Your win rate can play out many times. I'll give you example, right? 10 trades and 50/50 win rate. You know, you'll win five and lose five. What what comes first? What comes second? What comes third? What comes fourth? You don't know. The sequence is always unknown. And this is why risk management is so important because you can have five losses and then five wins. But statistically speaking, it's actually a trick question.

56:18I asked you can lose all 10 because it has to be a large sample size. You see my point? So now let's increase that sample size to 100. Yeah, 50/50 win rate. Let's say you lose 30 and then you you lose 30 and then you win 10 and then you lose 20 and then you win 40. What people going to do after the first 30 losses? Mhm. Now Monte Carlo tells you these draw down paths.

56:48What can happen? It tells you how the sequence can be made up. So it tells you how your sequence could be made up. Obviously you have your risk to reward. your risk rewards is the multiplier of the the the profit that you make and it tells you your equity draw down paths. It can tell you your profit paths and then what you do with that. So let's say so you know what a multiolor system looks like.

57:08So uh for the audience if you go on Google type in like a Monte Carlo system graph yeah it's just a cluster of loads of line graphs. Yeah. And where the clusters are is where you're likely going to fall. That's where most of the paths are. Now where you see like the odd line extreme anomaly. Yeah. But where you have like little clusters in the extremes, they need to be factored in.

57:27Yeah. So let's say you can hit an average draw down of like um let's say the system you plugged it in, it was like 150 trades in a year, 48% win rate, you know, good good like good profit, something you want to run, you run it in and a few clusters show that you can run into like a 9% draw down. What you need to do then is control your bet size. So now you say, okay, it's good.

57:51This is the Monte Carlo. This is the risk of draw down that we can fall in with this risk here using 1% or whatever it is. You need to then adjust the risk to what your goals are as a trader. Are you trying to do you care like are you a bit more risk adverse? If yeah, then you can up the risk. You you were okay taking a 20% draw and you're at nine, go 1.5 times the risk.

58:10So if you didn't like the nine and let's say you're trading someone else's money and you have like an agreement saying, "Look, yeah, if the if the if the account gets to this level, we need to have a conversation." Yeah. then maybe you need to reduce the risk right 1% risk for a lot for for people sometimes is too much they don't even understand it so you can just use this very simple risk of ruin risk of ruin calculation I think um I have a video on risk of ruin it was um it's just a plug and play type in risk of run on Google I think the one I use is a second search is like swift or something like that you plug in your risk-to-reward your win rate and the thing is you need to be honest with your win rate and then you put in like the risk per trade and what your risk or ruin is so risk Risk run on a prop firm might not be the actual draw down.

58:45Risk of ruin is just basically like when do you believe that you are just done for some people might be 8% 9%. So you put your risk of ruin at what where you think like you're tapped out and it'll tell you the chances that you reach your risk of ruin. Now if your risk of ruin is 40% it's way too high your risk of ruin and that's not just for that prop firm challenge that's for your collective going over a large sample size of prop challenges you're willing to lose 40 40% of them is quite high in my opinion you're going to turn through a lot of challenges right I think 10% is good no more than 15 I think that's that's you'll be in a good healthy risk like you'll be handling risk quite well then some people say less than 5% I think That's way too conservative.

59:36But I think 10% give or take is is fine. I I remember when I um first read Trading in the Zone and there was a a quote in there that

59:49always stuck with me and I repeat it so much. It's like ingrained in my head. [snorts] Mark Douglas says um there's a random distribution between wins and losses for any given set of variables that go on to define an edge. Basically everything that you've just spoken about there, right? We don't know when our string of winners is going to come. We don't know when the string of losers is going to come.

1:00:07as a default, you have to handle the betting size. When you understand that, the next question is, so what is the thing you should control? Everyone's going to come to realization I need to control the bet size. Yeah, 100%. Omar, I want to start to wind things down slowly, man. As much as I'm enjoying this conversation, and I feel like we could probably talk all day. Yeah, I was just going to say something.

1:00:25Yeah, before you wind it down, I was going to say something. It's I can't let it slip my mind. So, like like I said before, all my things were risk management and probabilities and controlling and this all of this. Yeah. I learned it from outside of trading and there's a lot of things that you can learn outside of trading that you can bring into trading. I watched this guy. Yeah. He plays blackjack on YouTube. Okay. We spoke about this yesterday.

1:00:48Yeah, we did. So, so he plays blackjack. Yeah. And he he's a card counter and he's banned from a lot of casinos now. He has to go like disguises and all of that. And he is he has investors that front him the bank roll to invest that to to play with. Now he understands there's edge when the number when the the card count is his way and there's no edge when the card count is not going his way.

1:01:10It's the same thing in trading. Right. It's very it's just one is blackjack and the other one is not right now. When the edge is in his favor, he he piles on the bet, but he can still lose. He still accepts that he can still lose. A good trade can lose. Right? Even if you have 50 confirmations, you can still lose a trade. Now all he does is controls the bet size, allocates a bit more to the when he wins like when when it's going in his in his favor.

1:01:29It's a bit different because when the card comes in your favor, it's like it's sometimes it can be like a slam dunk in your favor. Trade is not the same. But what he doesn't do is he doesn't he he doesn't change the bet the the bet sizes and he sticks to the plan. When he has expectancy, he he will bet. When he doesn't, he'll fold quickly. Now the same thing is in poker. Now, if poker was gambling completely, why is there a poker championship and not a uh a slot machine championship?

1:02:01This is what I ask people. Poker is very similar, right? You play poker before. So, let's say now you got you you got let's say you got pocket aces. Yeah. And it's six people on the table. You got pocket aces. You got the best hand. But you know what is people will think when they got pocket pocket aces like someone playing firstand poker.

1:02:15Yeah. They'll think that they're going to win that hand and they're going to pan on really quick. Really? with six people on the table, you don't even you have like a 40% chance of winning. Now, you bet too hard. Yeah. And it's the it's the flop. King, king, and five. You think one of these guys might not have a king, you're you're you're you're very likely losing this this this hand now, right? And no more aces come on the table.

1:02:42The guy had a king. You lost because you couldn't control the bet size. It was a very good hand. You should have bet but you bet too much. This is a very big thing that happens in trading too. You know people say size up on your winners. Size up and your winners. I don't believe in that because size a cup and your winner can very easily turn out. How do you know that that trade is going to be more of a winner than a loser?

1:03:01This is what I say to people. How do you know that trade is going to be more of a winner than a loser? And I don't believe in A+ and B+ and this that whatever. You should only have a setup that you know the expectancy for that you have tested many times. you know, your performance with this type of set with this setup specifically is great and you shouldn't reduce it. In my opinion, I don't believe in that stuff because, you know, like how do you know that this is going to be uh I've seen a I only take what I believe is a plus setup and I've seen my A+ setup lose a lot of times.

1:03:29So, how do I know when to size up be size down on it? Maybe they have a way to do it. Maybe I don't. You know, that's that's a good conversation to have as well. It's not like I'm right, they're wrong. It's just a debate and these things exist and that's fine. But yeah, that's that's the take I have on on on that as well. I like that, man. Have you um you ever do you know of Tom Hugot?

1:03:48Yeah. You ever watched him live stream? No. He's an interesting character, man. I I remember joining his Telegram. I think it was after I read his book. He runs like a free Telegram. I I I I believe I listened to audio book. Uh The Best Loser Wins. Yeah. Yeah. Great book. Um, he basically live streams every day, well most days on YouTube now. Uh, and he basically shares his screen and trades equities, day trades.

1:04:12He's on like a 1 minute, 5 minute chart. He's a big advocate of adding into winners. And I I'm not I'm not saying you're wrong. I'm not saying people should start doing this. This is not trade advice by any means, but I think he's someone that is in like the, you know, 0.001% that is able to do it the way that he does. He's a fascinating character, man. You gota not for you got to just watch him one day just to see what it's like.

1:04:41You can definitely build a position given that you're removing risk. So like yeah, I I I I've done that. But I'm saying from the initial risk. Okay. I'm saying like 1%. What makes you put 2%. I've built positions. Look, I I've gone break even shave. So I I shaved to break even and then another entry's coming my way. I'll take it. Yeah. I'll just build that position. But I don't know what would make me go heavier initial on the risk.

1:05:03Got you. Got you. But build build a position. Pyramiding a trade. Yeah. If you got if you got any to pyramid a trade. Look, some of your biggest winners are going to be pyramids. Yeah. One pyramid of trade going your way. If you can get one, two, three positions. I don't really get more. I I don't think I've ever got more than three on a pyramid. That will do a lot for your equity curve. If you can get that going, it can get out a lot of draw down.

1:05:24Yeah. It does a lot for you basically. Yeah. They I think they say a lot for swing traders as well. Obviously that approach I resonate with which is like if you find that way to pyramid into a trade and add to those winners, you tend to find over the space of a year, possibly few years, a large chunk of your money comes from a very small port proportion of your positions. They usually say roughly 80/20, right? 80% of your money will come from 20% of your positions.

1:05:51And this is why there's been many times where I've I personally like that approach, you know, with that though. Yeah. Made devil's advocate of that. Is that sustainable? What do you mean? So, okay, 80%. Yeah, statistically this is a very large anomaly and is that repeatable. Rather, if your profit was more split on a per trade basis, I'm not saying that some months you can have a very great hit rate.

1:06:16But I'm saying on a per trade basis, yeah, is it more is it more telling to replicate the success if on a per trade basis they were very evenly split than rather than when you had like one or two anomaly trades that carried your entire P&L. You're 100% right because I think you can have great months for sure, great months, bad months, what not. But I'm saying on a on a per trade basis that you know that's what builds to good month or bad week or whatever it is.

1:06:43Agreed. But if if it's if it's a specific trade, yeah, we're taking a month out of it. It's a specific trade that builds, let's say, 70%. Yeah. One trade builds 70% of your profit. I feel like there's a bit of fluke in there and you know, a bit of uh you know, you can't replicate fluke basically. So, I definitely believe maybe I I'd rather take the my position from that is not in said trades, but in said time intervals.

1:07:06M I'd say maybe 60% of your profits came from a said month where your edge really played out. It really played out. I think Yeah, that's fine, right? But not in a specific trade setup. You see my point? Yeah. Yeah. 100% 100%. Um all right, we're going to wind it down. Yeah. I I have a Sorry, I honestly I could do this all day, man. Uh I have a couple of segments I I like to end on. Um, one of them is a little bit of like sort of a mix between quickfire questions, few hot takes just to hear your thoughts on it.

1:07:40And the last one I'll explain. We call it confessions of a trader. So, starting off with quickfire. Um, swing trading or day trading? Swing trading. Prop firms or personal capital? They both have their place. If you're going to think what's going to take you longer further, it's actually a personal account. But initially, uh, they're both great. They both have their place. different different tools. Uh high win rate or high risk reward? It depends on the system, but let's just go high-risisk reward.

1:08:09Uh mechanical or discretionary? Mechanical. Trading alone or trading with a community? You know, when you're trading with a community. Yeah. Like let's say I know some guys they trade with their friends. There's one guy calling the shots and there's four guys following. Yeah. So it's trading alone. Um okay. True or false? Do you think most traders overco complicate trading? Uh, true. Do you think most traders risk too much? True. Do you think trading becomes easier when you trade less? False. Do you think protecting capital matters more than making money?

1:08:43Uh, yeah. True. Okay. Nice. Last one for

1:08:52you. What do you think is the biggest reason most traders keep blowing their challenge accounts? uh they have they think they have a strategy they don't have a strategy and they don't understand risk essentially they are very underdeveloped most people don't have a strategy they think they do if you ask them what is your defined strategy they will start I do this oh yeah also if this look look ask me my strategy day trading yeah simple I need to use multi use the daily the weekly yeah come to an understanding the next day should go higher or lower and Then I am working off of look that's all done from key levels there and then all I'm waiting for is a 15minute power of three and I'm entering or market maker model and I'm entering off a of a of a graded swing.

1:09:36So if you want to put the ICT terms first or second leg defined and that's it. Some people will tell you depends on this, depends on that, depends. You're you don't have a strategy. And I've said it to some people and they just they get a bit mad, but it's like you don't have a strategy, bro. You're telling me you do this, you do that.

1:10:00If you tell me what I'm doing in the gym today, I'll tell you, okay, if I'm ch if I'm doing chest and shoulders, I'm starting off with a with an incline bench. I'm going into a dip and then a fly, side raises, rear delt flies. Am I freestyling that workout? No. If you go to a guy saying chest and trees like I'm just doing the machine say like who's freestyling who's not.

1:10:16So yeah. Um okay last one for you. So like I said we call this confessions of a trader. So think of this. I I basically put together questions that are a collection of conversations, experiences, situations that I've seen people going through uh and I throw them out to our guest. And the idea is that think of it as someone is confessing something about their journey to you and they want your advice, your guidance, your wisdom to put them straight, you know, like before this sometimes, you know, like um I come across a bit harsh.

1:10:43Yeah. But but but but it's like um it's from a place of love honestly. Yeah. Yeah. Okay. I hear you. I hear you, man. So today's confession of a trader. This trader says, "I feel like I'm always looking for another confirmation before entering. By the time I feel certain the move has already happened. How do you become comfortable trading with uncertainty? Okay, look. Yeah, we are trading with uncertainty always. There is no guaranteed trade. Statistically speaking, a guaranteed event is one. Yeah, we operate between zero and one.

1:11:24It's never one, right? So, we always deal with uncertainty. Some people might be closer to what they believe is certainty in terms of 0.9 as you tend to the one. Yeah. Now with what they said. Yeah. With a confirmation. Look over confirmation. Adding a confirmation doesn't do anything. I I'll give you the reason. When I I automate the strategy. Yeah. If I add a confirmation, I'll tell you what happens. Yeah. The frequency will lower a lot.

1:11:57Right? And as the frequency lowers, the equity curve lowers cuz you need frequency to make profit. right now for a discretionary trader adding that confirmation. Yeah, you'll be very surprised. You need like I think past you need one to two effective confirmations. Effective is the key word there. Yeah. So, like I said, I'll wait for um so like let's say my day my my daily is set and I'm bearish. Previous high swept aggressively. Wednesday is going to go lower Euro. So, what I'm going to do is I'm going to wait for just a retracement and then like displacement going back lower and tracking on the next retracement.

1:12:29Call that. We call it displacement retracement. Yeah. What more confirmations do I need there? I don't need any more confirmations. Adding that confirmation, I'm going to miss a trade. You're going to miss so many trades. And by the way, every added confirmation usually after two confirmations, it does nothing for your win rate.

1:12:50People think it adds 10% more, 20% more that it doesn't add a lot to your win rate. It might even decrease the win rate. You'll be surprised. because it might not have no effect. So have a set of effective confirmations, right? What I said you can use and it's effective. You don't need to reinvent the wheel. A lot of people use this, right? In the retail world, they just call it a big engulfing candle, right? This displacement. So with the uncertainty, it's back to what we said, fear of the unknown.

1:13:16You probably haven't practiced and these confirmations. Why are you hunting for an extra confirmation? You should have practiced these confirmations in in back testing already. So why would you need this other confirmation? If you know that these two confirmations I use and you you know the confirmations that you already use are effective, why do you need to you wouldn't feel the need to add another thing. It's working for you. You wouldn't feel the need to act and uh not act sorry to involve another confirmation.

1:13:42So this what I'm saying most people they genuinely they don't practice enough. Now, that person in my opinion should go on a simulation genuinely practice and they'll see if they need to add a confirmation or not. And by the way, if you're going to add a confirmation, this is a big deal. This is a big change in the plan, adding or removing a confirmation and that needs testing. So, yeah, they should definitely do the testing for it. Nicely said, perfectly put, man.

1:14:09Um, Omar, it's been a pleasure, man. No, it's like seriously, it's been a good conversation. Thank you, man. I appreciate it. You've been a great guest. I'm uh I'm looking forward to watching this back already, man. Me, too. Right, guys and girls, that is another episode in the bank. What was your thoughts? As always, we want to hear in the comments down below. What was your most interesting takeaway? What did Omar share that shifted your perspective? Opened your eyes to thinking about trading in a different way.

1:14:35[snorts] You'll never get new actions with the same line of thought. So, if you're trying to change your trading, what was your takeaway from the episode? Put it down in the comments below. We'll be reading every single one. And if you're someone that wants your confession read out to a future guest, check the link in the description below.

1:14:54There'll be a form in there where you can upload yours, and we will read it out to help you on your journey. Thank you again to Omar. If you enjoyed this video, make sure you like it, subscribe to the channel for more episodes just like this, and we will see you in the next one. Take care. Welcome to the Prop Firm Trader YouTube channel, the number one channel in the world for funded traders.

1:15:13The best way to continue to support us is make sure that you're subscribed to the channel and you like this video. That's going to help us to continue to reach the best prop firm traders and best prop firms in the game. As well as this, we also have a free Discord through Chart Fanatics where we deliver endless amounts of education and value completely for free. On top of this, we have in-depth strategy breakdowns on the Chart fanatics YouTube channel. And of course, we have professional trader interviews on the Words of Wisdom channel.

1:15:39And last but not least, we have completely free trading education which is going to completely revolutionalize the space on Chart