How I Made Money on a Losing Trade
44sThe paradox of profiting from a losing trade is a compelling hook that challenges conventional trading wisdom.
▶ Play ClipAI Summary
This video demonstrates a trading strategy that allows traders to profit even when their initial trade direction is incorrect. The core technique involves splitting position size across two correlated assets, such as Solana and Bitcoin, to manage risk and increase the probability of overall profitability. The creator illustrates this with real trades, showing how a losing trade on one asset can be offset by a winning trade on another, resulting in a net profit.
Chapters
[00:02]
Introduction to the Strategy
The video opens with a Solana trade that hits its stop loss but still results in profit, introducing the concept of making money from failed setups.
[00:31]
First Method: Splitting Position Size
The primary strategy is splitting position size between two to three correlating assets, particularly top crypto pairs, to increase chances of success.
[01:13]
Bitcoin Trade Setup
A Bitcoin trade is shown with a break of structure, expecting a retracement. The trader looks for a confirmation entry within a demand zone, using a 5-minute timeframe for internal break of structure and change of character.
[02:29]
Using Fibonacci for Entry
The trader uses the Fibonacci tool to identify entry levels, targeting the 60 level (golden zone) for both Solana and Bitcoin trades.
[03:40]
Risk Management Options
Three options are presented: risking $1,000 on each trade (overexposure), picking only one asset, or splitting the normal risk ($500 each) to maintain discipline.
[04:37]
Trade Outcome
Solana hits stop loss, but Bitcoin hits take profit, resulting in a net profit of $1,385 on a $500 risk, demonstrating the strategy's effectiveness.
[05:35]
Win Rate and Profitability
The strategy yields a 50% win rate on two trades, but the winning trade is three times the value of the losing trade, leading to net profitability even with a 40% win rate over 10 trades.
[06:44]
Conclusion and Next Steps
The creator emphasizes that knowing the strategy isn't enough; execution is key. He mentions a follow-up video and promotes his 'copy me' service for replicating his trades.
The video effectively demonstrates that by splitting position size across correlated assets, traders can achieve profitability even when individual trades fail. The key takeaway is that disciplined risk management and strategic asset correlation can turn a losing streak into a net positive outcome.
Mentioned in this Video
Tutorial Checklist
2
01:13
Look for a break of structure on a higher timeframe (e.g., 1-hour) and wait for a retracement to a demand zone.
3
01:38
Drop to a lower timeframe (e.g., 5-minute) to find an internal break of structure and a change of character for confirmation entry.
4
02:29
Use the Fibonacci tool to identify entry levels, targeting the 60 level (golden zone) for optimal risk-reward.
5
04:23
Split your normal risk per trade across the correlated assets (e.g., $500 each for Solana and Bitcoin) to avoid overexposure.
6
04:37
Monitor both trades; if one hits stop loss, the other may hit take profit, resulting in net profitability.
Study Flashcards (5)
What is the first method to make money from a failed trading setup?
easy
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What is the first method to make money from a failed trading setup?
easy
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Splitting your position size between two to three correlating assets.
00:31
What is the risk-reward ratio for the Bitcoin trade mentioned?
medium
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What is the risk-reward ratio for the Bitcoin trade mentioned?
medium
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3.79
03:40
What is the risk-reward ratio for the Solana trade?
medium
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What is the risk-reward ratio for the Solana trade?
medium
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3.04
03:40
What is the net profit from the example trade with a $500 risk?
medium
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What is the net profit from the example trade with a $500 risk?
medium
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$1,385
05:19
What win rate is still profitable with a 3:1 reward-to-risk ratio?
hard
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What win rate is still profitable with a 3:1 reward-to-risk ratio?
hard
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40% win rate (four wins at $1,500 each, six losses at $500 each, net $3,000)
06:17
💡 Key Takeaways
🔧
Splitting Position Size
This is the core strategy that allows traders to profit even when wrong, by diversifying across correlated assets.
00:31
⚖️
Risk Management Discipline
Emphasizes avoiding overexposure by splitting risk, which is crucial for long-term trading success.
03:40
💡
Win Rate vs. Profitability
Shows that a low win rate can still be profitable with a favorable reward-to-risk ratio, a key insight for traders.
05:35Full Transcript
[00:02] when you are wrong? Now, this is a Solana trade and you can clearly see that this trade hits my stop loss. So, how then did it still make money? I'm making this video to show you that because this might just be the extra
[00:17] thing you need to turn your trading around. There are two ways to go about it. The first one not only increases your chances of making money from a failed setup, but also increases your chances of being in a winning
[00:31] what is [music] it? Splitting your position size between two to three correlating assets. I'm going to use practical example here because
[00:43] they are actual trades that I took. Crypto assets are highly correlated, especially the top ones, and if you're trading with large capital, it is just better you stick with the top crypto pairs because it simply has more
[00:58] I started this video showing you a Solana trade. Now, let me show you a trade that correlated with that, which is actually Bitcoin. Okay, so this is a Bitcoin trade, okay? Now, we had a break of structure
[01:13] and normally, when we have a break of structure, we expect a retracement and price to move [music] lower. But, you don't just go blindly take a But, you don't just go blindly take a trade from here, which is a demand zone.
[01:26] It works sometimes, but sometimes it fails. What you want to do is to look for a confirmation entry within this region. Now, this is the area I'm looking for confirmation entry. [music]
[01:38] Then, over here is my target for this particular trade. This line here, >> [music] >> and the over here, the top, once it goes above this line, it becomes invalid. So, this Bitcoin [music] trade. And we've
[01:50] already tapped into this region. To get a confirmation entry, I simply moved down to the 5-minutes time frame because we're coming from the 1-hour time frame. How what is the confirmation? Here we have a
[02:02] break of structure here. Because it's on the 5-minutes, I usually call it the internal break of structure. And because of that break of structure, once we go the opposite way from here, we have
[02:14] a clear change of character. So, the change of character just simply gives you the signal that, you know, you cannot take an entry. How do I do it? Simple, one way is just pull your Fibonacci tool
[02:29] >> Then you look for the short position, so you can start from maybe here. The midway, take it to the top, and um target is here. For this particular trade, I went
[02:43] For this particular trade, I went all the way to this region. Because I was looking at this this 60 level because this golden zone we have a area. So, this is the same setup I had for Solana. So, if you look at this,
[02:58] so have [music] the same setup. This is for Solana here, and this one is for the Bitcoin trade you just see me show. Again, the idea is that if price taps into this region
[03:12] position, okay? The same thing with Solana, we have an internal change of character here. Price has already tapped I'm in I'm in this trade. What am I expecting is that price, you know, this chart just goes
[03:26] and hits the profit. So, these are the two setup happening at the same time. One for Solana, one for Bitcoin. And both of them are giving a very good risk reward ratio. Bitcoin is 3.79,
[03:40] risk reward ratio. Bitcoin is 3.79, while Solana is 3.04. particular point? Let's say my normal risk per trade is There are three things I could do. One is risk $1,000 on each trade. This way,
[03:57] I have doubled my risk on the same trade idea. >> And if both goes against me, I lose $2,000. Now, this is not discipline. >> This is just overexposure, and I mean you shouldn't trade this way. So, the
[04:10] second thing you can do is to pick only Solana or pick only Bitcoin and hope that the one you pick is the one that actually works. And the third one is to split your normal risk between two of them. That is
[04:23] normal risk between two of them. That is $500 for Solana and $500 for Bitcoin. >> I end up not risking more than I should risk on the same trade idea. So, that even if both of them fails, I'm still operating within the confined of a
[04:37] disciplined trader. This is exactly what I did in this particular trade. Now, let's see how it played out. So, Solana tapped in and Solana just shot up and hit um stop loss. Bitcoin tapped in, but just stayed
[04:52] it didn't go above the stop loss. And you can see both of them And you can see both of them started going down. profit. Solana eventually,
[05:07] you guys see, went and hit take profit, but we're all went and hit take profit, but we're all already out of the Solana trade. So, Solana is a losing trade, but Bitcoin hit take profit [music] giving a net
[05:19] profit of 1,385 and a $500 risk. even when you're [music] wrong on a direction. That is splitting your position size between two correlating assets. The second way is
[05:35] this. Technically, this example that I showed you, if it was a single trade, it's a 50% win rate >> [music] >> on these two trades because it was one
[05:48] losing trade and [music] one winning trade. But it was not a one winning trade. But it was not a break even on the profit side because the value of the winning trades is three [music] times the value of the
[06:01] losing trade. What this does is that even if you lose 60% of your trade, you are still winning. >> If I take 10 trades and only four of them wins and six of them
[06:17] only four of them wins and six of them loses, that is a 40% win rate. Four wins at 1,500 because each win is three [music] times is $6,000. Six losses at $500 is $3,000. So, the net P&L is
[06:32] $3,000 even though I've lost 60% of the time. So, I am up $3,000 on these 10 trades. I hope this makes sense.
[06:44] Now, knowing this is not just enough because people hear this and still lose >> That is what I want to talk about in the next video because the gap between doing it, >> [music]
[06:57] >> this is where most traders struggle with. And if you want to copy this exact setup where I take them on my own accounts, split position, risk management and all, this is what copy me is [music] built
[07:12] for. Link is in the description. The weekly is open.
