Is day trading like gambling? I Don't know why people get so offended or triggered when this question gets asked. Um I want to explain to you I think one of the closest things to gambling right? Uh, when it comes down to trading, it's one of uh, it is one of my favorite things. Uh, when it comes down to like Risk to reward ratios uh and only buying based off of that, right? This is not something that I recommend for everyone. Um, obviously when it comes down to you only trading based off of risk to reward and not waiting for proper confirmation and all of the other criteria to be met.

Obviously, it comes at a greater form of risk. that's why some people compare it to gambling. but of course again, it's just based off of statistics and your win rate. And I really hope this video can give you a real example.

um, uh or at least it could be of real value for you as I give you a real example of a trade that I took based off of risk to reward ratios and maybe you'll understand why some people see them to be so so important. Let me go ahead and start sharing my screen. Uh, one of the things that I did today a is I jumped uh into Sqq. A lot of you guys might have seen that trade if you're part of my Lpp team.

I made a little bit over eight thousand dollars on this trade alone. I Sold very very early I ended up selling based off of previous highs. so that's right around 1880 to 1890. As you can see a hit highs of 1930 I'm not a perfect Trader I'm not here to pretend to be as this thing became very overbought.

One thing I took into consideration is that Okay, well if you look at overall lows and current highs, that is a change of 6.3 percent, right? You see my little trendline tool 6.3 percent. The thing that I love about my focus is again, this is not for everyone, but this is Sqq which goes up when the NASDAQ Market drops. But if the NASDAQ Market were to find a support level then it can begin to recover and maybe go back to previous highs that it was previously at right so very quickly from current to lows uh, to overall highs that offers 1.96 percent. That's for QQQ which is the single leverage ETF or for T Kiki right from overall lows.

If I was a perfect Trader to overall highs, this is a 5.8 percent. Now, what do I mean by a five to one ratio? It's literally super simple, right? We talked about this in one of our earlier videos. There's a one to one ratio which means one potential one percent for potential reward versus one percent for potential risk. You would have to have a 50 or greater success rate for this to be profitable long term when it comes down to a two to one ratio.

Two percent upside versus one percent Downside: Three percent upside? Uh, versus you know, one percent downside. You get the gist right: A five to one ratio is I'm only going to take advantage of an opportunity based off of five percent upside and I'm only willing to risk one percent. So what? How does this make any sense? They based off of real money, right? So if you trade with ten thousand dollars, the example that I can give you is if you're willing to risk um, or trade with ten thousand dollars in a perfect world, right? If you are perfectly able to make five percent and only risk one percent. which again, it's never perfect.

But five percent upside on that, ten thousand dollars would be about about about a 500 return, right? Not bad. When it comes down to that one percent downside. It all every trade comes at some form of expense, and it's however, it is that you manage your risk. With this five to one ratio, it would mean that with that ten thousand dollar trade, you're willing to risk 100 So you're willing to lose potentially one hundred dollars to potentially make 500.

So then therefore, you can see, right? Uh, the example that I can give you on over here is: Uh, when it comes down to the five to one ratio, you can literally have a 20 success rate. And as long as you focus on that five to one ratio every single time and you cut losses every single time at that one percent, it comes down to discipline uh, and structure and consistency, right? It's very easy to talk about. very difficult to do over a long period of time, but you can be profitable with a twenty percent success rate. This is why again we talked about: if you are more selective and you wait for more quality setups again, it can be very favorable.

So when looking at this, the reason I love this example today is because the five to one ratios that I see a lot of people present is based off of maybe a previous resistance that was either last week or you know, last month or a time that is not very relevant. I mean a lot happens in the market on the day today, right? This is based off of previous patterns I mean this is what I explained to our Lpp team as you can see as NASDAQ Market sold off. It was approaching previous lows as QQQ was approaching previous highs where it got rejected at yesterday and then sold off. So it wasn't rocket science for me, right? I was looking at previous highs so I wasn't just taking.

Okay, it's up and it was previously down. You know how much margin can it sell off because when this sells off, then this goes up. But I was taking previous patterns into consideration and I was like, okay, well SQ had a really nice rip. It looks like now it's retesting previous resistance levels right.

The risk to reward is five to one. so I'm okay with risking one percent to potentially make five percent all day. right? When people say well, that's gambling, you know, um, you're just, you're just hoping that it goes according to plan. Yeah, there is no I'm not waiting for news I'm not waiting for any other criteria to be met and that's why I say right One of the things that I shared with my Lpp team is I don't do call outs I don't do anything like that I I shared my trade with them and I explained to them do not copy this This is a very risky trade and why not be open about? if you do choose to take a trade based off of less criteria and more of just you know the risk to reward is favorable.

why not just be okay with saying yeah? this is more risky, but again, if it's calculated risk then it makes and it makes sense to you. You're an adult. You can do whatever it is that you want, right? So I think that's what's most important to me is I wanted to give you a real world example of not of a pattern that offers five to one ratios that is a week old or a month old. I mean this literally happened today, right? We sold off, you know? Um, NASDAQ Market sold off and then this thing began to recover.

We went back to retest previous highs and then because we were at a potential resistance for Sqq because there was so much downside potential based off of today's lows on Skq. I Saw potential on this thing being able to recover. And guess what after all of that, after my risk to reward ratio, after waiting for confirmation of a reversal, just making sure that some criteria is being met. even after all of that, I'm still not guaranteed a win because guess what? That is why there's the five to one ratio because I still have to manage and mitigate my risk at that one percent.

But I Thought this would be a great example for someone that's just getting started on showing you why it's so important to have risk to reward ratios. When it comes down to trading, it's based off of like your criteria. If you see that you suck at trading as of right now, and maybe you want to be a little bit more selective, right? Maybe you should focus on trades that offer a greater potential reward while risking a little bit less. right? If you're someone that sees, uh, you know, maybe you're a little bit more conservative.

You trade stocks that are a little bit more on the bullish side, so therefore it's easier for you to make money right then. Maybe you can choose to focus on less conservative respiratory ratios and More of a maybe three to one or a two to one right? It doesn't matter. The idea is as long as you if you're going to do something to be consistent with it right and I just thought it would be uh I Thought it was really interesting to kind of share and give you a real world example of a real trade setup. Uh, that offers a decent upside potential based off of you know intraday patterns and that is all based off of risk to reward ratios, right? It's not perfect.

Uh, it all comes at some form of risk and the risk is just your job as a Trader to manage and mitigate yourself. So I Hope that this video can really inspire you to not just obsess about how much money you could potentially make, but that our job as Traders if we want to see growth in this market is to control how much money we give back because that is the only way that we will see growth within this market. So I Really do appreciate you guys time. I Hope that we're into a thumbs up if you guys have any questions.

I Hope that you know that you can always send me a direct message either via Discord or via Instagram and that's going to be linked down below. And if you want the ability to join my team and watch me trade live every single day I Work with one team and one team only and that is that second link in the description down below I Appreciate your time and like always, let's make sure that we end the year under green Note: Take it easy team!.