Speaker A
Okay. So, I just recorded a whole 30-minute video talking about this, and this is like the fourth time it's happened on my OBS now recording.
Learn how to scale your trading account using probabilities and true win rate insights for long-term success in day trading.
Key Takeaways
- Probability is the most important and least understood aspect of trading success.
- True win rate must be realistically assessed for effective risk management and scaling.
- Scaling should be based on capital divided by max consecutive losses to preserve longevity.
- Higher win rate strategies with lower risk-reward ratios provide better long-term results.
- Prop firms often cost more than traders realize and may hinder progress.
Summary
- The video emphasizes the critical role of probabilities in trading and understanding true win rate.
- Higher risk-reward strategies are harder to learn and sustain for most traders.
- The speaker recommends having at least $50,000 before moving to a live account but suggests $2,500 can be sufficient if you understand risks.
- Prop firms are critiqued as costly and limiting for traders.
- True win rate is often overstated online; traders must be honest with themselves for sustainable growth.
- A probability sheet is introduced to help traders understand the likelihood of consecutive losses over 100 trades.
- Scaling an account involves dividing capital by the maximum expected losses in a row to determine risk per trade.
- Lower risk-reward strategies with higher win rates are better for long-term equity growth.
- The speaker shares personal experience with a 70-90% win rate using lower risk-reward setups.
- Honesty, proper risk management, and understanding probabilities are key to becoming a full-time day trader.
Chapters
- 00:00Introduction and video recording issues
- 00:30Importance of probability in trading
- 01:30Challenges of high risk-reward strategies
- 02:30When to move to a live trading account
- 03:20Understanding true win rate vs. perceived win rate
- 05:30Long-term objectives and payout misconceptions
- 05:40Using probability sheets to assess losses
- 06:40Personal experience and scaling formula
- 08:40Adjusting risk based on win rate and risk-reward
- 09:40Final advice and closing remarks
Full Transcript — Download SRT & Markdown
Speaker A
But, I'm going to redo this video. Okay, this video is on probabilities and your win rate and how to scale accounts.
Speaker A
Okay. God, I'm so pissed. [laughter] All right. Anyway, let me touch on probabilities, okay? I talk about this all the time.
Speaker A
Um, your probability. I hate saying it because I say it so much. I feel like someone could clip me and it would just be like, probably like, uh, I hate it because I say it so much, but
Speaker A
it is the most under or least understood part in trading that is the most important part in trading.
Speaker A
Okay, probability is everything in trading. What is our probability of hitting this high? What is our probability of hitting this low? What is our probability of hitting the equilibrium of the range?
Speaker A
What is our probability of filling if you trade order flow? What is the probability of filling POC?
Speaker A
Low volume node, high volume node. What is the probability that we are going to have, you know, buyers step in, sellers step in, all that kind of stuff? Not just trading, but also starting trading.
Speaker A
What is the probability of me becoming a successful trader? And this is what I talked about in my last video. I'll actually touch on it right now.
Speaker A
Why higher risk reward is going to be harder for the average person because one, it is just harder to learn. It's just true.
Speaker A
It's going to be harder to find a higher win rate strategy. And, um, because your probability of being successful or being like an average trader that's making good money is very low.
Speaker A
You know, it's already very low. Maybe it's like 3%, but out of the 3%, I'd rather be the 2% than the 1%. You know what I'm saying? If you don't, it's not that big of a deal. But, I'm going to touch
Speaker A
on probabilities and your true win rate, your honest true win rate. Okay? So, probabilities, okay?
Speaker A
Um, actually, that's pretty much it for probabilities. I just want to touch on that because, um, that's everything in trading, okay?
Speaker A
Um, but this video isn't really about probabilities. This video is about how to scale your account.
Speaker A
And, you know, when you should move to live and stuff, okay? I usually tell people you need at least $50,000 before moving to a live account.
Speaker A
And, I still agree with that in a sense, but I also hate prop firms.
Speaker A
And, I think that you should get off prop firms as soon as you can.
Speaker A
Um, I think some people might not understand that a 50k combine is just $2,000 US dollars. Okay? That's it.
Speaker A
I guarantee you most of the people have spent $2,000 on prop firm accounts, okay? So, I'd say once you get to around 2,500, you'd be fine to just move to live. You're really not going to get anywhere with funded accounts. Again,
Speaker A
probability speaking, um, but you also have to understand that it's much more risky and you need to understand your true win rate and understand everything I talk about in this video before you do that.
Speaker A
Okay? So, your true win rate, okay? And, I'm not talking about the win rate you tell people online.
Speaker A
I'm not talking—I matter of fact, I had someone come into my, you know, they were telling me, "Oh, I have a 40% win rate with 7R." I think they said, or maybe it was 8R.
Speaker A
Bro, no, you don't. Why are you lying to yourself? Nobody in here has a 40% win rate with an average 8R. Okay, if you do, shout out to you, and I don't know why you're watching this video.
Speaker A
Let's just be honest. You would probably be somewhere in the box. Okay? That's just facts, okay?
Speaker A
I want to find out your true win rate, not what you tell people online.
Speaker A
And I don't care if you tell people online you have an 8 or 40%. It does not affect me at all. I don't give two shits.
Speaker A
But if you're going to, deep down, tell yourself, I want to be a full-time day trader, okay?
Speaker A
Not someone that just gets one payout. I think especially with people that do high risk reward, they're just looking at the next payout.
Speaker A
And that's not what you need to do if you want to be a full-time day trader.
Speaker A
After you get your first payout, there's not some magical spell that continues you to get payouts.
Speaker A
People are not understanding the long-term objective. And the long-term objective with lower risk reward is better because you're going to have a higher win rate, and I will explain that on this sheet.
Speaker A
Again, this is not about this. I have made a whole separate video on it. Um, it's below on my YouTube channel.
Speaker A
But I'm not really going to get into that too much, hopefully. But, um, yeah, probability speaking, that's going to be best, okay? Your true win rate.
Speaker A
So, how do you find your true win rate? Well, this is just from backtesting, forward testing, intuition testing, you know, just that's also just forward testing. But being honest with yourself and understanding your true win rate, there's nothing wrong with your specific
Speaker A
win rate, but you have to be honest with yourself. So, you can get this down and nail it and then become a full-time day trader off of it.
Speaker A
So, I bring to you the sheet. This shows you the probability over a 100 trade period that you will take losses.
Speaker A
Okay? So, let's say you have a 40% win rate. No risk reward speaking, we're not speaking your reward. For this example, let's say it's three risk reward, but it really doesn't matter. We're speaking risk because this is going to be how you
Speaker A
calculate and how to scale. 40% winner. So, we can come to the sheet here. You guys can screenshot it right now, if you like.
Speaker A
Your probability of hitting one loss in a row, 100%. Again, this is like worst-case scenario type of stuff, but as you can see, the lower your win rate gets, the worse probability you have, just purely speaking. You can see how much
Speaker A
nicer it gets over here. And I'll touch a little bit on this in a second.
Speaker A
But you can just tell by this sheet, like this sheet here just explains why higher win percent is going to be better in longevity speaking, because your equity curve is going to be a lot better.
Speaker A
Okay? So, for me personally, when I started my live account, you know, I was like, "Okay, I want to scale this." What do I do?
Speaker A
Well, you have to find out your true win rate. And if I'm being honest, 100% honest with myself, I do lower risk reward, and I'm sitting from a 70 to a 90%.
Speaker A
Okay? Somewhere in this range, from at least when I was, um, starting my live account. Now, I'd say I have, you know, built a little bit of intuition. I'm probably around here somewhere, anywhere from 75, 80 to
Speaker A
90. But we'll take this for example, this whole box here. Okay? And what I would recommend, since this is worst-case scenario, I would recommend finding around where 30% is at, anywhere from 20 to like 30%.
Speaker A
Um, you know, consider if you have good intuition. So, I'm going to come on the lower end, you guys want to use the lower end, and I'm going to find where's like the 30%. Okay, right here, five.
Speaker A
Okay, you want to give yourself a little bit of drawdown, so I pick six. And on my account, this is the formula to help you scale.
Speaker A
It is capital divided by max losses in a row. Okay? Simple. $2,000 on a live account.
Speaker A
You're risking $2,000. You divide $2,000 by the max losses you have in a row.
Speaker A
That is what you risk per trade. That is how you're going to scale your account. If you want to scale your account, you will pick these higher numbers like five or six. If you want to be more longevity, you're going to pick
Speaker A
something like 10. If you have higher risk reward, you might need to find an extended version of the sheet. You can put this into ChatGPT and I'm sure it'll give you like an extended version.
Speaker A
Okay, but that's why I say when you have a 25% win rate, your true win rate. Okay, most people are like, "Oh, I don't have a 25% win rate with my 13 risk reward strategy." Okay, be honest with
Speaker A
yourself. Okay, you can [ __ ] online, but when you're honest with yourself and wanting to take trading seriously, be honest with yourself.
Speaker A
Okay, it's probably around.
Speaker A
Of course. Um to be more safe. Okay. But I don't really know what else to touch on in this video. Hopefully this is very simple and I try and explain it as nice as I can and the truth um I'm
Speaker A
not here to tell you guys lies or to you know, persuade you guys to anything. It is all personal opinion and opinion and this is not financial advice. I'm pretty sure I'm required to say that.
Speaker A
But this is my opinion. Okay, I really really really really really highly recommend to do this if you want to become a full-time day trader.
Speaker A
But if you have any questions, let me know in the comments. Um I usually don't say this because I don't really care about subscribers or likes.
Speaker A
But um if you guys could leave like a like or subscribe, that would help the algorithm to push this to more people.
Speaker A
You know, share this video with your friends. Um and I really don't have much else to say. Um of course, leave comments. If you have any questions or anything, I'm free to answer them. If you guys want to
Speaker A
debate me on any of the topics that I have, maybe you disagree with something, you can add me on Discord. My name is littered, same as YouTube.
Speaker A
I'm not someone that is um very like straight-minded. Like if you tell me something, I'm going to hear your opinion out. I'm not going to um and I think this is just how everybody should be. Keep an open mind,
Speaker A
okay? Don't be mind-locked. If someone genuinely says something, I will switch my mind, okay? I'm open to other stuff.
Speaker A
That's what you have to be when you're a trader. That's just a little advice right there.
Speaker A
Um but yeah, hopefully this video helps um to understand scaling. Um the higher your percentage is here, the more risky you're going to be, but of course, higher risk is higher reward.
Speaker A
Um I hope you guys have a nice rest of your week.
Topics:trading probabilitieswin ratescaling trading accountrisk managementday tradingprop firmsrisk reward ratiotrading psychologyaccount scaling strategytrading success
