Hey hey, what's up my friend, so in today's episode right we are going to discuss Orion. How do you be in the top 5 % of traitors when the majority feels when 95 % of traitors Phil? Ok? So here's the thing right, the way we're gon na Renault run today episode is that we first and foremost will discuss about how losing traders thing and then how professional winning traders thing alright. So there's two sides to it so number one right for most losing traders. They they treat trading and something that you know they can make money faster.

I generate a consistent income from trading. You know, make money every day every week every month and when they try this endeavor and they don't find success. What happens? Well, they can try again for a few more weeks, few more months and eventually they'll burn out and give up trading altogether and that's why the statistics is so high right number of losing traders because they are very short-term oriented right eating. Oh, oh, I need to do is just study a weekend course.

You know I can master trading, it can make a consistent income blah blah blah, but, on the other hand, right professional traders, the best money managers in the world. They are not looking to make a consistent income every day or every week. They are thinking in terms of decades right to compound their returns over time and that's how the big money is made. The big money is not made right trying to make.

You know. 50. Pips a day 100 pips a day and stuff like that, no the big money is scaling. Your trading account and letting it compound over the next few decades.

Alright and that's the first key difference, or is that, in terms of expectations most losing traders, they are too short-term oriented. They want it now their money fast. They wanted this week. They want it this month and that's why they feel right, because it's unlikely to happen and when it doesn't happen, yeah expectations are not met.

They try to persevere a little bit more. Eventually, they give up it put up to 95 % of the statistics. So that's the first reason right they don't embrace compounding. So if you wan na, be the top 5 % of traders number one you have to embrace compounding ting long term number two for this one over here is that you know for most losing traders.

They structure. They are truly in such a way whereby hits I mean till I lose okay, but for the top traders out there did structure, they are trading in the way that hits I win till I also win. So let me explain so if you read the book market wizard right, you know that a few of them went on and managed. You know their own hedge funds and that's a brilliant thing right, because when you manage his funds, when you manage people's money hits I win till you also win and here's how? Because when you made a change funner and you have something called management fee, so every year, okay, where they make money or not, you can take a small percentage of the fee right of the under of the assets under management right and cover expenses can be your Salary can be your office whatsoever in the past.

It used to be two percent a year. Mon now might be lesser, but they have a management fee, and this fee helps them cover the expenses, so they might have a losing you're losing money in trading doesn't matter. They still get paid anyway and if they make money for the year, guess what they're gon na take a cut of the profits. So you can see that in a way it becomes, you know, hit they win, kill.

They also win and that's how you want to structure your trading right hit you until you also with by no you're, not gon na set up a hedge fund this year or next year. Unlike me, so what can you do about it? Well again, just study the people who have excel in this field right, for example, ma minor vini, he's the stock market reason and he's doing it brilliantly. He clearly right has a amazing ability to treat the stock markets, but that's not his only source of income right. He has books, steady, sells, he conducts seminars, he probably have a membership area for members and again hits he win kills.

He also win and that's really important right. You want to structure your trading in a way that you win right, both ways which are very cool. So in most losing traders the only thing about their trading, the only source of income and when it doesn't make money, that's it right. They lose so think about how you can make this happen.

For you right hit, you win, kill you also in the setting right. Most losing traders right they fail is because they're not willing to do the work, and you might be thinking or know right now. I am willing to do the work right, so let me classify what isn't. Content is work right if you go on to a forum and so for new trading strategy, as you were, checking about the markets where they are talking about.

That's not doing work. If you, you know blindly follow someone's strategy because they say that it works for them and you try the strategy for the next three to five tricks. That's not doing the work, let's be honest right. So what does doing the work entails for traders right? Who are serious about this right? Doing the work means taking a particular piece of strategy, a concept right and doing the work to validate it to fine? Does it work based on historical data? So this means they could do back.

Testing systematic back testing right running through the data through the running to this strategy across historical data and see how that strategy fares. If it's working great, maybe actually I can test it in a live market using a small amount of money and see how that works out. That's what I mean by doing the work validating the concepts and strategies you come across, but most people right most losing traders. You just take the strategy, take it at face value and someone say it works.

It works great, I'm gon na trade in life and that's how they lose all right, because they won't have the confidence right to continue trading in right when the drawdown come. So you must be willing to do the work be willing to validate the system, the concept, the strategy. Only then right do you have what it takes right to trade at a professional level. Next one losing traders, they simply focus on the winning rate and don't feel bad about it because I myself, I used to like a system with high winning rate 90 % win rate.

Alright, that's how the money is made, but here's the thing right: you can't have a high winning rate system, a system that makes money 90 % of the time, but in the long run you could still be a losing trader. How? How is that right now? How is that possible? You say to yourself: let me give you an example. Let's say you have a system that makes money nine times out of ten right. Every time you win, you win the dollar, but at ten times that you lose, you lose $ 50.

Can you see that how all your little profits that you have accumulated along the way is eroded right when that ten percent of your losses come right, because one time you lose right in your losses is so huge right now it wipes are all your small accumulated Open profits and that's how you can remain a losing trader despite having a high winrate so now, how do how do the pros look at this I'll? Do the top five percent of traders look at this this equation? Well, they don't just focus on winning rate. That's the truth: they focus on a few things. Number one. Winning rate is one of one part of the equation.

They also focus on their average gains to loss right because, what's the point of having a high winrate, but your losses is so much more larger than your winners. So that's why they also pay attention to their average games to loss, and the last and final thing they look at is also their frequency of traits. For example, a high-frequency trading firm, called virtue financial. If you study dia a piece of our research on them, they are winning rate.

Is what 51 percent right about one to one receiver: ratio of 51 percent 52 percent and they are consistently profitable every single day? And how is that possible? Alright, with such a average matrix well, the secret is that they have a high frequency of trains. They trade thousands of times each day and that's how that HFD former I can make money almost every single day. Another example: a trend following hedge fund, their win rate, is anywhere between 30 to 40 percent. But how do these funds right manage millions, if not billions, of dollars? Simple right? They don't just rely on their winning rate.

They also half-right a high average games to lost this means that when they lose a dollar okay, that's fine right. They, on the other hand, right will then make three or four dollars on their winning train. So there are winners right at three to four times larger than losers and that's how trend-following hedge funds make their money. So you can see that professional traders they don't just focus on a winning rate, its winning rate frequency of traits and your average gains to loss.

That's important and finally, last thing right is that losing traders, what do they focus on right? What are they? Usually, you know affected by number one. The news number two opinion right. They always you know find out. Oh NFP right bad results.

Oh someone says that you know this. This trading strategy doesn't work right or someone says hey. This chat pattern is very reliable. Seventy percent hit rate.

I should focus on this and that's how losing traders thing about this right. They are swayed by the news, the noise, the opinion, but what about professional traders? What about the top five percent of traders? What do they do? Well, they let the data speak for itself. They will only make trading decisions based on the data and where do you get, the data from this could be based on your back. Testing could be based on your forward.

Testing is based on your own testing. Your own work, your own research as what I've shared with you earlier, and that's how the top 5 % of traders all right make their decisions based on data not based on feel not based on opinions, not based on news, not based on noise. Okay. So, let's do a quick recap right.

I know I've covered a lot in this episode number one, the top 5 % of traders they embrace compounding because that's how the big money is made number to the top 5 % of traders right structure. They are trading in such a way whereby hit I wind till. I also wind number 3 - top 5 % of traders. They are hard workers.

They are willing to do the grunt work. They are willing to validate a concept of strategy that they come across. They don't trust anyone or anything number 4, the top 5 % of traders. They focus on expectancy right; in other words, they focus on the winning rate.

They focus on your average gains or losses in the frequency of your trades and number 5. Okay, if you want to be a top trader or you want to be a consistently profitable trader, you must follow the data. Don't follow the news, don't follow the opinion. Don't follow your feelings or whatsoever follow the data.

So that's it. I've come towards the end of this episode. I wish you good luck and good trading until next time you.