The house always wins , everybody knows that that's why casinos are paying for your hotel and paying , for your food because they're always making money a lot of money how do they do it what is an edge and how do we trade like a casino hey guys welcome back to the channel and today i , wanted to define what is a trading edge and how do we develop a trading edge so i made a little . presentation for you let's take a look what is the trading is so we need to understand probability , and we need to be like the casino the house always wins that's why the casinos are buying you all the . food and paying for your hotel rooms fancy hotel rooms and whatever because they know that they're always making money and the only way they're going to make money is if they bring you in so how . does it work so let's start with a roulette wheel i learned this from adam coo about four years ago or something and i thought it was awesome and i wanted to share it with you guys so on a roulette wheel there are 18 reds and 18 blacks and two greens so if you don't know how to play roulette at all you basically bet that when they spin the wheel um it's going to land on either a red or a black you say i'm betting on black so you could bet on red or you could bet on black but the , casino always wins with the greens so how does it work out suppose you bet on black your chances of winning are 18 out of 38 because there's 18 reds there's 18 blacks and there's two greens and the casino wins with the greens as well so if you bet on black you have a chance of 18 out of the . whole 38 that's 47.3 percent the casinos chances of winnings would be in that case all the reds . and the green which is 20 out of 38 which is 52.7 so this means that the casino has a 5.4 edge in roulette that's calculated by taking their 52.7 probability less your 47.3 probability which gives the sum of 5.4 so every time that a person makes a bet on the roulette they have a 5.4 percent edge that means for every dollar bet on the roulette the casino would make 5.4 cents or 5 cents doesn't sound like a lot but if there's a million dollars of bets which there , likely is in the casino maybe in a quarter or who knows depending how big the casino is in a million dollars of bets the casino would make 54 000 now we need to trade like the casino the casino . doesn't care that this bet they lose that even if there's a winning streak a number of streaks going on at the same time and today was a bad day this week was a bad week because there's so many customers coming in and winning they know that as long as there's enough bets they're always going to win because they have the edge that's how we need to be as well so first of all , we need to only trade repeatable price patterns those are the ones that have the edge the ones that we've seen before and it's not 100 of the time that we're going , to win but we have a little bit more than 50 there's a good chance they're going to win . and i'm going to show you an example soon secondly we need to manage our risk to reward .

ratio and this is something the casino doesn't even have because with with the casino , they're betting one-to-one for every dollar they might win the dollar or they might lose . the dollar we have a possibility and i'll show you what i'm talking about to bet two to one or , even three to one that for every dollar we bet we have a reward possibility of two dollars or , maybe for every dollar we bet we have a reward possibility of three dollars that is something , that makes our possibility of trading like a casino even better than the casino themselves but something that is so important to expectancy which is the ability to know how much you're going to make over time like we saw that the casino has a 5 edge on roulette games so so too in order to , have positive expectancy we need to make sure that we keep our trades all the way to the end that means that we don't cut our profits short and we hold them all the way to the end which , for many traders is not the case that's not what they do so let me give you an example here we have a two hour chart on the swiss yen and it was ranging so the repeatable price . pattern here is that when it gets to the top of the range you're going to want to sell when . it's high you want to sell and when it gets to the bottom of the range you're going to want to , buy but notice how in each one of these trades i always took a 2 1 ratio meaning that if whatever i was going to risk i was going to make double so as the range was developing as you see my . cursor over here here's the first top then it hits this bottom and here's the second top so the . fact that we have two tops over here is already enough to define it as a place of resistance , we wouldn't know that there's a range yet at this point but at least we know that there's resistance up here so once the market starts to go lower i'm going to get in and you see over . here that it's the risk to reward ratio is two it was 22.6 pips as my stop loss and 45.3 pips is my target and i stayed in and i went all the way down and got the two to one then the market , made a second bottom so now we could look at it as a range because there's two tops and two . bottoms that's enough to define as a range and i'm gonna make the box and the box will keep on going . so it did hit the bottom and went back up but i didn't shoot it yet i didn't trade it yet because . i didn't know that it was a range and it goes back up and up and up and when it hits the second when the second time it hits the top we're gonna get in again right after and again we're gonna go for , two to one again this is 21.7 pips as my stop loss 43.5 pips as the target and again it went now it . went back up and it did break the range over here um but it tested and it seems like it failed so at , a certain point after it failed when it broke this little support line over here feel it safe to get in again and you protect the trade by covering it with , the top of these previous highs that's where your stop loss would go which was 30.1 pips and we go for the two to one ratio which is 60.1 pips and again it made it then the market went all .

the way down and did break past the bottom of this range but immediately was pushed back up by the bulls so again another time to try it out and here we go again this one took a little bit longer , it actually went up and almost came down but it did quite just make it and then when it did go to , the top another time it's fair to go short again basically these are the repeatable price patterns . it goes up we are going to assume it goes down and if you lose you lose but we have the , edge we're assuming that this is repeatable and this is something that could be done , again and again so until it stops happening we just got to keep on doing it so here's one shot here's a second here's a third this fourth one and then right after it goes to the top . and has this bearish candle again you want to go short because it's at the top and then it , hits the bottom and again you want to go along so and then again it hits the top and you want to go short again and even again it hits the bottom and you're . going to go along again once it passes these this support line that one almost did make it . look how many we have here it's unbelievable we have 1 2 3 4 5 6 7 8 9 10. this is a two hour , chart so that means you could measure it over here in a total of 28 days and 18 hours we had one two three four five six seven eight possibilities of just trading the tops and the bottoms going , for the two to one ratio so what you clearly see over here is that this is something that's very . powerful we want to go with the repeatable price patterns because that makes us like the casino , and the fact that we have the edge we know that more than 50 percent of the time it's going to go down when it hits that resistance point or when it hits that support point it's going to go , up and not only that we have the possibility of managing our risk so that we're going for 200 dollars when we're risking 100 or whatever it is your risk to reward ratio is , but make sure it's at least two to one and then finally this is really a hard part for many of the , traders is to hold your profits all the way don't think about this one trade be like the casino . the casino doesn't care if they have a losing day a losing week because they know in the end over a . series of bets they're going to reap the profits and so too with us if we stay in the trade all . the way to the end then and only then will our trading edge blossom and it could be a great . trading edge guys this is what you need to know this is how you have a trading edge and these are . the types of things that i teach in my course i'd love you to check it out look at the description , below it's helpwithtrading.com it's actually a free course right now to all my subscribers and . i hope you like this video and if you do you can give it a like subscribe to the channel where i'm putting out a lot more content right now more on the trading psychology developing a trading edge , risk management and all these things that are the real important things to make you a consistent profitable trader so till next time guys dd app,

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