Trading Risk Management: Step-by-Step Guide & Transcript

[00:02] Those are the ones that blow up your account. That Those are the ones that take you out of the game completely. Those invented trades, those trades where you just sat down, you didn't plan for it, and you just took it.

[00:15] for it, and you just took it. >> [music]

[00:34] within the allocated risk limits to prevent them from being this trade over here on the right-hand side. Okay, I'm pretty sure everyone's been in that whatever it is. Okay? Uh monitor tail risk.

[00:49] Watch out for dangerous exposure concentration across all trades. Um potential blowup where we have like huge concentrations. Uh sometimes when things may be going parabolic. For example, when we had the metals earlier in the

[01:01] when we had the metals earlier in the year, now we have oil, um which is just getting parabolic for those of you who've seen the move in the last couple watching oil? See hands?

[01:13] Okay. This is something you're actually living through and is history that we're you're taking notes, reviewing charts each day, staying tuned with in tune with the news. It's extremely important for everyone. Okay?

[01:26] Um prevent emotional trading. Has anyone ever been on tilt before? All right, I'm pretty sure this It should be everyone in here. It's probably happened once. Okay? So, prevent emotional trading. Okay?

[01:40] Enforcing accountability is extremely important. Okay, hold traders outcomes. Because we're entrusting you with capital, capital. And the same thing that you should be doing with your own capital.

[01:54] Okay? Next is scale responsibly. All right, if you're seeing consistency in specific setup, if you're seeing consistency in a in a particular theme or area or a sector, that's where you

[02:08] should be scaling your risk. If you're not doing so well, not performing so well in a specific sector or setup and this stuff, you should be scaling back your risk. So, you should always be scaling responsibly, whether

[02:20] it's scaling up or scaling down. How to be your own risk manager. Okay. P&L plan. So, pretty much each day, does everyone have create like a daily plan checklist in the morning, your pre-market trades, certain levels you're

[02:34] >> Yes. >> Okay, perfect, perfect. Extremely should have the levels that you're looking for, you should have um pretty the road map for the day in itself. Any pilots in here?

[02:53] >> Private? Pilot? Pilot? Okay, and just let me ask you, before you take off, there's a flight [snorts] plan, right? You go through some checks, right?

[03:05] could just if anyone who wants to volunteer, what do you do? >> That's right. >> To make sure we get there safely, right? Perfect. That's the same thing that you should be doing with your trading plan

[03:19] each day. Going through that P&L plan for each of your trades. Constant Constant conversation with the traders on the desk. Some of you may not trade on the desk. So, this is why we also encourage pod

[03:33] Right? And a lot of us are remote. We're in the age of remote trading. We have a lot of remote traders, so you can connect with people remotely, right? it be whatever chat, through Zoom or whatever,

[03:48] whatever chat, through Zoom or whatever, you can connect with people. And also, this is why in this event here, it's also an event not for you just to come to learn, see what we do, speak to some of the traders. It's an also event

[04:00] where you should be networking. I want everybody to network. Determine your capital, the amount of capital you're going to deploy, right?

[04:15] risk-off day? It's going to be a lot um is it is basically meaning is a lot of things a lot of stocks going to be moving today. Is it a high opportunity type of day? Or is it basically just a regular day?

[04:29] So, you need to determine that itself to help set your stop for the day. Okay? Understanding the risk-reward um where you're wrong, uh being adaptable,

[04:42] discipline, and having an accountability partner in itself. And that's where you should be all looking for your pods, okay?

[04:54] Risk that we're going to talk about here is again, the most essential components of successful trading, risk management and edge. Does anyone here think they have edge in their trading or found edge in their

[05:06] trading? Okay. Does anyone here think they're using a proper risk management? Okay, that's good. Well, if you're missing these two components

[05:19] here as far as risk management or edge, you know, knowing where you have uh some informational advantage, technological advantage, technical advantage itself, um if you don't have any of that, more than likely you're going to fail.

[05:34] Okay? So, you have to make sure you have risk management and edge. Super super super important, okay? Defining risk. At SMB, each trader is allocated a daily stop.

[05:49] lose within a day. Does everyone have a lose within a day. Does everyone have a daily stop that they use?

[06:04] >> Oh, we're in trouble. We're in trouble. Thankfully you're here, right? And I want to talk about as far as defining risk in itself is that just understanding EV or having positive EV

[06:19] on our trades, right? Does anyone here Is everyone here Not anyone, I should say. Is everyone here tracking your stats?

[06:32] again and if you hear I want to see 100% everybody hands up as far as you important. Cuz that's how you scale. That's how you can become from good to great.

[06:46] You have to be intimate with your stats. Okay? You have to know what your average daily win is, your average daily loss is. What is your best setup? What's your worst setup? You have to know these things. Okay? You have to really treat

[06:58] be successful. Okay? It's extremely important. in this instance here, right? As far as EV, what you can do is uh for example, you have to track your stats and if for a particular setup, you say, "Okay,

[07:14] based on the setup, I should get a $500 reward for this Okay? And with this setup going based on my stats, has a 40% probability of winning, right? So,

[07:29] what you're risking on this trade, right? What are we risking? So, we know in this instance here like in with this particular setup as far as risk to reward, I'm risking about $200 drawdown.

[07:42] Okay? And it's a six 60% probability that I'm going to lose on this trade. Okay? And this is why it's so important also in tracking stats because again, out of 10 times you're only winning four

[07:56] A lot of people say, "Oh, that's a losing trade." Right? And you just walk away from it. But until you're intimate with the stats concept, this is makes trading powerful.

[08:12] step where a lot of people aren't willing to go. And in this instance here as far as calculating EV, you take the reward, Multiply it by the probability and this is you'll get from tracking your stats

[08:27] in the setup. All right? And then what you're going to do is take right? As far as what you would lose on this trade in the setup times the probability of you losing in the trade. Is anybody here math major or PEMDAS?

[08:42] Are you guys familiar with that? All right? So we take our parentheses, right? We break those down. We have right there and everyone will be able to see this in the slide deck. It'll be sent out. Okay? And as we see

[08:54] how we're uh breaking it down, we'll have $200 based on our reward here and from that and we'll come with the $80 as far as the EV. So this is a winning

[09:07] Okay? So for all your setups that you're taking, you should understand EV of your trade. Anyone here using AI Anyone here using AI to analyze your trading data?

[09:26] Should be 100%? It's so easy. And a lot of the AI tools and the AI agents completely free. Yes, they have different versions. Some it be slower um in itself but there's so

[09:39] many different avenues out there and free avenues where you can use where I wish I had this stuff when I first started. trying to be profitable, trying to what you have so many resources at your

[09:53] fingers here. So, all you have to do can go to the clearing side of it or you just go to the trading records, copy and paste. You dump it right into the AI agent into

[10:07] the search box or the the box itself. Right? Just paste it in there. You don't have to even upload a CSV file. You just paste the data. You can just copy and paste it.

[10:20] And you can get actionable insights by as soon as you're you put it in. And you can just prompt Here's my P&L Which 10 trades produced the most profit?

[10:33] What setup? What time of day? And you can literally do this in a minute or less. In a minute.

[10:50] the using AI. Right? By you know, clustering as far as your best trades, losing trades, time of day edge that you have in your setup. Very basic stuff

[11:02] by just prompting. Okay? Which tickers are your best tickers? What sector?

[11:14] things that AI can just by simple prompts, even if you're not computer using AI If you're not, you're going to be in huge trouble. I only saw like two maybe

[11:27] two people raise their hand. You should be using that and even anyone who's not computer savvy or tech savvy in itself, you can easily easily easily in itself, you can easily easily easily use this tool to help you. Okay?

[11:40] And what's so important also is that and I think a lot of people focus Do you more people here focus on their losing trades or their winning their losing trades or their winning trades?

[11:53] Okay. What I think is extremely important also everyone here put a lot of time into your winning trades also researching them. Your outliers.

[12:08] That's extremely important because I feel like a lot of people that I talk to they obsess over the losing trades. They're losers. You really want to focus

[12:20] You want to focus on where you have edge. What time you're making money, how you're making money. That's extremely important. Okay? That's extremely extremely

[12:34] important. And Jackie And Jackie you sat with me in Miami, right? reviewing your trades say, "Hey, come out of the desk or whatever it is or you

[12:48] can Carl can you talk to me about this trade that you took or you can tell you right?' It's very important to go through each and every single detail of the trade

[13:02] of those winning trades and understand the nuances of the trade. Okay? Understand why the trade worked. Was it the volume that helped? Was it the catalyst?

[13:14] Was it the sector? Was I just lucky? Right? You really need to understand in great detail why you're winning and you need to embrace it.

[13:27] Okay? You have to embrace the details of your winning trades, and I want everyone to do that here. So, for the losers,

[13:40] patterns. Is it a particular stock? Is it midday trading? Does anyone trade too active midday?

[13:54] Okay. >> [laughter] You can use AI, right, to see exactly what times you're losing midday. Right? Is it specific stocks you're losing?

[14:07] Is it particular stocks that are lacking in volume? So, you can use AI to your benefit, to your help, for your to help you. Another thing people tend to do is they tend to oversize on low

[14:22] conviction trades. Reason being, just because the market opens up, and what's so crazy about it is that at 9:30 a.m., right, it's kind of like off to the races. Right? Everyone feels

[14:36] You see the orders flying, everyone's locked in, but yes, we're all detectives, we're processing information, right? But doesn't mean soon as the bell rings. We have to know

[14:50] We have to know what we're looking for. Right? And Jackie, you understand that, right? You sat with me before. You You You You seen this, right? You have to be patient.

[15:02] the trades come to you. You don't have to go look for them. The best trades come to you. Okay? Also, revenge trading. Any revenge traders?

[15:14] >> [laughter] >> Those patterns. So, to help me prevent that, I know if I'm not trading well, right? or I'm starting to get agitated, I should

[15:30] get to I should start to feel warm inside. stomach. Does anybody before you go on tilt or feel yourself, you know what tilt or feel yourself, you know what your triggers are before you get there?

[15:46] Meaning, write down what your triggers are, and as soon as you're starting to feel those triggers, step away. Walk away. Come back and regroup. Okay? Risk

[15:58] management. For my pilots out there, as a pilot it's easier to have a long longer runway or shorter runway as a Longer runway, right? Definitely longer.

[16:11] Right? So, what you want to make sure is you're doing everything that you can do your your reach to make sure you have a long runway as possible. Okay? And by doing that is by managing your risk well. That's extremely important.

[16:28] And as far as with being a pilot, the best risk the better risk management that we have, the longer runway that we With good risk management, we can still make mistakes,

[16:41] controlled mistakes. So, when we lose on a trade, right? >> [laughter] Right? But there's two sides of that.

[16:59] and unexpected loss. Right? There's two sides of that. Which ones hurt the most? Unexpected, right? So, this is why it's important to follow that trading plan in itself, always to follow that trading

[17:15] Because the unexpected losses, those are the ones that derail you. account. That Those are the ones that take you out of the game completely. So, these are things that you have to make sure that you're doing. Okay?

[17:30] Every trade has bad trades, but the unexpected losses, those are our Achilles. That's our weakest point. where you just sat down, you didn't plan for it, and you just took it.

[17:47] And then what you're doing while you're in the trade, you're like, "Holy, what And instead of getting out, do you get out? No, right? You're like, "Okay,

[18:02] this is going to turn around, right?" Walking through, you can say, "This is And then you get into the point like, "Holy crap, this is not turning around, right?" So, that's what you want to prevent.

[18:16] we're praying, right? Where you get to the extreme like, "Oh my goodness." Like, you're literally praying. We want to prevent We want to take losses, but we want all the losses to be expected losses.

[18:30] Expected. Extremely important. we're going to go through really quickly.

[18:42] Proper sizing. And that ties into having a detailed grading system. An accountability partner, also having a pod, talking to other people,

[18:56] working with other people, connecting with other people. trading and having people that I can go back to, right? And they can give me feedback. Instead

[19:10] of just two eyes looking at the stock. There's 10 eyes, there's 12 eyes. Right? And what's And what's so great, I team, um there's about eight of us on the

[19:24] team, that's 16 eyes. Right? And not saying everybody has to do that, but I definitely encourage you to start building a network, connecting with

[19:36] What makes you better is someone challenge you on the trade. Explain to me why I'm taking this trade. Why I'm in this trade. And then you challenging other people on their trade.

[19:53] saying, "Oh, this trade doesn't It doesn't like it." Why? Because it's not within the setup. It's not in the playbook.

[20:06] It's not what we planned for before. Not what we back tested before. it's so important for you important for each person in here

[20:18] to be selective. Stick to your playbook. You can add trades to your playbook, but that's a process that we'll talk about Okay? Know your checks that are in your favor

[20:31] also. That's important as well. Why is the trade working? Why do you want to take it? Where you can and how do you can increase size on the trade? Is it because it's broken out of its

[20:43] pre-market highs? Holding higher? Above VWAP? Above my 5 EMA? Above my 9 EMA and holding? With high volume, consistent volume? Above its 52-week highs? So, I want to

[20:56] my favor. I also want to know why I should be Right? The stock's been consolidating after a It's consolidated for maybe an hour or so.

[21:10] >> [clears throat] >> I'm starting to question that. It's still holding above VWAP. What's the nearest resistance level? sector doing? I want to question all these things. I

[21:22] like these pilots here have the checklist that they go through. I have my checklist to scale up on a trade, as far as upgrading the trade, and also downgrading the trade. Okay, that's extremely important.

[21:38] Okay, and we'll go through that. With poor risk management, we can't afford to make as many mistakes, and this is why it's taking a lot of unexpected losses, right, that we didn't properly account for. It decreases the probability of us

[21:53] being a successful trader. All right, and as you can see here on of this chart of the losses that I have here, if you of the losses that I have here, if you lose 10% of your account on a trade,

[22:07] to break even to get break even on that account, you have to make back 11.10%. account, you have to make back 11.10%. If you lose 20% of your account,

[22:20] You see we're moving down this ladder, you lose 30% of your account, you have to make back 40 pretty much 43% to get back. And you see where we're 50%, you have to make back 100%.

[22:35] So, this is extremely important just understanding this, right? To put things in context of how you're going about risk. What we should be doing is preserving our capital.

[22:50] Okay, we have to preserve our capital. It's extremely important. And you can numbers go. Like once you start to get past this 50% point, think this is very important for

[23:05] everyone to internalize this and understand why risk is important. Edge is definitely important. Having edge if you know, again, you can have risk in your trade, are you going to make money?

[23:18] So, these two things go hand in hand. I would say that's extremely important want to make sure the risk management aspect of it of your trading is there. detailed playbook, no risk uh framework,

[23:33] you're not having a you don't have a detailed playbook. You just enter a trade. And that's something I do not condone, do not let people do. If I'm walking up to someone

[23:46] or now, since I'm in uh uh in in Florida, calling someone or chatting with someone or on some type of voice call with them or they zoom or whatever, Discord, whatever it is,

[24:02] uh it's going to be big trouble. Okay, like, why are you down on this trade? But, you know, for the most part, 99% of the time, everyone has a plan for the trade. As I said,

[24:17] you know, the way at SMB we treat our traders, we treat them respect, capital. And we expect them to respect that capital by having a trade plan and a plan for each and every single trade

[24:31] Okay? So, that's extremely important. All right? Um again, as we spoke spoke about before, emotional trading, revenge trading, holding, you know, invalid trades or getting into cute trades where

[24:44] want to be in something." Those are some of the worst situations that you can be in. By failing to prepare, you're preparing to fail. important. It's you know, very important about trading. This quote is very

[24:57] powerful. Yes, you know, you can jump into trades, you can also follow what we're doing and just, you know, again, Steve gives a great which you can just follow and get to, but you have to understand and you have

[25:11] It's extremely important. That's an And I always remember my high school math teacher, Mr. Bernauer. He said, "Either you pay now or you pay later." When you pay later,

[25:24] So, it's important for you at the beginning to put in your process, put your playbook together, put your trading plan together, in place. So, it's really important in the beginning of your trading career,

[25:40] establishing these processes and all your routines. the heavy lifting early. Okay, you might find success things, but I'm going to see how long you're going to be able to last.

[25:54] It's very important to have your processes in place, your daily routine in place, okay? Each and every day. okay? Each and every day. Everyone have a trading plan here?

[26:10] I want to see a 100% next time, okay? 100% next time. Data basing chart work, qualitative work itself, study setups.

[26:22] working? What time frame supply? Carlson, um I'll talk to them. I don't have a I don't know what works. I don't know what to do.

[26:36] I don't know where to start. Well, one thing you can start from, right? Steve and, you know, for some of you in Is anyone new to SMB community very new? Okay, no problem.

[26:49] Um what we do, right? Is Steve gives a great morning uh game plan that everyone can follow in itself, right?

[27:01] And this is a good basis for you to start from. what you can do is see how these stocks traded throughout the day, right? broke out, how they broke out, how was the volume.

[27:17] holding above VWAP? Did it pull back to VWAP and bounce from there? Did it Was it an opening range break? And this is the basis of how you can start to build your playbooks.

[27:30] Is you review all these stocks that are in play each day, you start to you know, you pretty much create like an archive or a collage of all of these setups. Okay? And this is how you start to build

[27:43] You start to build the nuances. Do we have anybody here that trades I'm pretty sure everyone here trades equities, of course. Some people may may equities, of course. Some people may may not. Anyone here trades futures?

[28:01] Um so many different products, right? when we're looking at the the listed stocks that we trade, there's about like each day. But really all we're doing is looking

[28:14] for patterns, right? We're pattern recognition specialist. That's our job. We're looking for all of these consistent patterns that we can trade

[28:28] equities with. We can trade FX with. We can trade futures with. have different nuances for each of these products, but all we're doing at the end

[28:40] patterns. We're not looking for 3,000 patterns, right? Like for my team, for my guys I'm with, we have about six core playbooks.

[28:52] with, we have about six core playbooks. Okay? again what we were forced to do know, run that we saw on the metals, gold, silver. Anyone holding on to

[29:04] silver or had silver they were holding for a very long time? All right, cheers. See you. Okay. But what it forced us to do was push us outside of our comfort zone where we just traded normally stocks and

[29:17] equities, but forced us really to trade futures. And what we were doing, even though it's a different product, it's a new product So, some things as far as risk may be downgraded because it's a new product,

[29:31] And you always want to do that when you're trading something new. But because of together over the years and we put together over

[29:44] the years we were able to trade silver futures overnight the afternoon, the the the early morning session, late evening session, the the the the Asian session.

[29:57] So, that's why it's important for you to build these playbooks. Because you can take them to other places and when the market calls for it you can deploy them and use them. So, it's really really important for the you

[30:10] know, as a beginning trader to focus on this process of building your playbook. You have to do the heavy lifting. In your beginning of your career you'll to stay consistent. It'll be

[30:23] discouraging because you know, any like A+ students here in school, college, high school, any A+ A students, 4.0s, 5.0s? All right, all right. It's okay, right? And usually what you had to do was to

[30:37] study right? Absorb the material get a A. Life's easy. >> [snorts] >> you study, build the play- playbook,

[30:51] You mark up the charts, you make the plan, you put on the trade, feels like you just got kicked in the Right? Like, what the hell is going on?

[31:04] is going on? So, a lot of it is the time you need to take of building out the playbook, understanding the nuances. Not just like, okay, this worked last time, but actually having the playbook,

[31:19] time, but actually having the playbook, the stats, using AI, better, and archiving. Okay? Back testing. Technology, the AI tools.

[31:31] And what's even more important, which I feel a lot of traders feel a lot of traders now and I think this is the core of trading, and this was is the core of SMB,

[31:47] it started with the core of SMB, is screen recording review. Watching the tape. Understanding what happens before something breaks out. Understanding a failed breakout.

[32:04] Your entries and exits, watching all those important swing points. Not saying that you have to watch your whole day of trading, you have to be efficient. Watch the most important parts, the most

[32:18] actionable parts. Right? And for me, when I'm in the during the inside access meetings I have on Mondays, One of the big things I like to focus and I emphasize on, and for people who

[32:31] and I emphasize on, and for people who watch, is not the actual breakout or the breaking ranges, I like to study and highlight what happens before the stock breaks out or breaks down.

[32:46] the meeting. She's even been in the office. That's one of the most important that we see here. Just not taking a blind breakout, but understanding how the stock is breaking out. Consolidating below the breakout zone

[33:03] like some of the best breakouts after something's touched a couple times, comes back a little bit later in the day, consolidates really tightly by that and then breaks. So, it's really important for your muscle memory,

[33:19] To be able to do that. Because what happens is when you get in that scenario, right? You see the trade like, "Oh, I saw this in the tape from 2 weeks ago. I saw this Tesla breakout. It got up to

[33:35] 300 to 360, right? It was very similar to what I saw in um some of the quantum stocks, or GTI. So, it's really, really important that each and every person

[33:47] study the tape. That's It's a core example. I mean, a very core principle, I should say, of uh trading and building your playbook. and building your playbook. Trade risk uh set up percentages, okay?

[34:00] This is extremely important. For your A+ trades, >> [snorts] >> maybe three to five times a year, sometimes two in a year um in itself, uh depending on the the

[34:16] you might get one um in itself, maybe two. But these instances, very rare, Highest conviction setups. And again, you have to have your

[34:30] playbook in your archive that's built out and for me I would say honestly for you to have a playbook right? You need to have probably about 50 to 100 sample size. And how you can do that not just going

[34:43] by equities, you can go as I said by crypto, you can do futures, right? crypto, you can do futures, right? To help build that out. But just going setups.

[34:56] Max risk deployment on these setups. And I'm going to show you in the later slide how this kind of ties in as far as with these A+ and A setups. with these A+ and A setups. Okay? Max risk deployment is warranted.

[35:09] In these type opportunities the trader should be risk seeking. the trader should be risk seeking. You should be seeking risk. opportunities that we're looking for. This is where again

[35:25] why we why are why are we trading? Why are you trading? Why do you trade? >> It's rewarding. right? Jake.

[35:39] Why are you trading? >> I like building my edge, expressing that >> Pay it forward, right? Pay it forward helping other people and right? Right? So that's why a lot of people

[35:52] have a lot of gamers here and we love to win, but you also be compensated for in these type of events you have to be risk seeking. You cannot fear these setups. It may feel like the stock is punching

[36:06] you if you're wrong. But again, you cannot fear these setups, okay? You should be risk seeking. Risk seeking these opportunities. For your A setups, you should be using about 25% risk and in some cases even very rare as

[36:19] I said I'm sorry 50 to 100% of your risk you should be seeking. In your A setups about 25% those happen maybe about one to two months as far as frequency wise. Your B+ setups maybe once per week.

[36:34] Your B setups risking about 5% and you can see here how you're exponentially sizing, right? Where you're from your A+ trades you're risking maybe 100% of your depending on that as far as the setup and then with your B trades and this is

[36:48] why it's so important to have it organized here where you lose you're losing the least amount. The least amount in these setups. So this is why you have to use discretion. You cannot go into each trade with the

[37:00] same amount of risk. You cannot. You just can't do that because what's going to happen is either on the end of same amount of risk for every trade, what's going to happen is you're going

[37:12] to either end up negative. Right? Or just flat because of all the losses you took from those B setups really. got for the month just brought you back to flat.

[37:27] One a month or slightly negative. So this is why you have to use discretion with your trading. The 65/5 rule. And this is what ties in from the last slide that I have.

[37:39] 65% of all your profits be for each and person that's here. Right? This is using case I feel like our A+ setups that we're looking for the

[37:53] ones that are taking place couple times for the year. They're going to be probably 65% of our profit on the year. So this is why I say when these events come, you have to be risk seeking in these events.

[38:08] Okay? And that's about 5% of all trades that take place in the year and these is A setups. P&L. Okay? How to bump your risk?

[38:24] Make two stops in a trade on a day, should bump your stop by about 20%. Showing consistency, no massive days of taking um outlier losses,

[38:38] you're showing consistency, but again, not making multiples of your um your your your stops over a 2-week period or 4-week period, again, where you're up very consistent, you're probably about 3 days green, 1 day flat,

[38:51] 1 day negative. In those type of situations, you can In those type of situations, you can bump maybe about 10%. Okay? Uh low variance as far as with your P&L, as far as volatility in your P&L,

[39:04] sure that, you know, again, if you have very low variance in your P&L, consistent P&L curve, uh you've proved that you have uh consistent and you're current with your sizing, this is how you can bump your

[39:17] How to reduce your risk? Have a soft clock out, your daily clock out, out. out. Okay? Or again, your your equity curve

[39:30] is in a downward slope, cutting risk. So, you hit your uh daily stop, you're done for the day. Weekly stop, automatically cut by 50%, monthly stop hit it by 50%, cut it again

[39:45] get stopped out of a weekly stop or monthly stop, you cut another 50%. Because when you're in a losing cycle or in a bad cycle, you want to limit the amount that you're

[39:58] you want to limit the amount that you're losing. and you make back what you've lost from the few cuts, then you can start to again, scale your risk. Okay? So, case study.

[40:13] Habits and characteristics of a profitable trader. 58% win rate. 2 and 1/2 profit factor. 2 and 1/2 profit factor. So, every $2.55 he's losing $1.

[40:25] So, every $2.55 he's losing $1. Sharpe ratio 2.3 2.23. This trader is doing daily report card. Screen recording of you every day. Asymmetric risk deployment. Discipline risk reduction.

[40:39] As I spoke about before as far as when you're in that down slope in itself, what you're seeing is you have to be cutting back your risk Okay? Active stats tracking.

[40:53] you're taking all the trades that are in your playbook. report card from one of my trainees in Miami in itself just from

[41:05] the other day. And again, like breaking it down by the time segments throughout What he's doing, going through the trade, going through the detail, for that day, understanding what his constraint for was the trading, the

[41:20] overview on the day, what he learned today, or he or she, and improvement for next time. So, these are the things that you want So, these are the things that you want to make sure that you're looking for.

[41:32] again, over a 13-year period, So, one of our traders, win rate of 58%. One trader I talked to you gave me he was giving me let me do this. Profit factor is 2.55.

[41:47] Max drawdown was 1.84. And that was just one of the days in the later of his career. And he had a max winning day of the 2.3 mi- million. But, one of the key success rate, sorry, I can't go through detail, was all the heavy lifting that

[42:02] The playbook, right? The playbooking, the heavy lifting, right? Going through all these important things that you're supposed to do at the beginning, really important. P&L curve, right? As you get

[42:16] it This is why it understands to how you scale exponentially over time, right? By doing all these processes and again, you have to do that heavy lifting at the beginning, going through all the planning, going through the playbooking,

[42:29] going through the archiving, working extremely hard. And again, as you start to win, as you start to scale, you see how it scales exponentially.