Trade Like a Casino for Consistent Profits by Adam Khoo

hi I'm Adam Koo and today I'm going to show you how I really make money consistently as a professional trader you see sometimes when I tell people that the way I generate income the way I build my wealth is by trading the stock markets samp you look at me finally and you go hey isn't that gambling doesn't that depend on luck isn't that risky and I'm here to tell you the honest truth and the honest truth is that trading is gambling absolutely stock market is the giant casino is a legal casino so let me ask you this in in gambling who always lose this money the answer is the players always lose money see as a player sometimes you may win or lose in a short term you may have a winning streak based on luck but luck doesn't last forever luck would eventually run out and eventually players will always lose everything they have but who always makes money in the end the answer is the casino always makes money in the end right I'm sure you've heard this phrase that the house always wins the casino always wins no matter what happens why that is why the casino would give away free food free entertainment free drinks just to attract people to play because the more people that play the more money they make now how do they do that how can a casino and sure that in a game of chance they always make money and I'm here to share view the secrets of the casinos and to show you how as a professional trader I set myself up as the casino and that's how I always make money in the end so how do casinos guarantee that they always make money in the end well what they do is they rigged the games in such a way that they have a statistical edge over the market or they've got a positive expectancy while the players and negative expectancy so here's how it works let's take a typical game called roulette so it let what happens is you've got a giant wheel right and this wheel is made of numbers and you've got this spinning device right when you throw the ball in the ball spin you'll land on one of the numbers and what you can do is you can bet which number you land on will it land and or even number a black or red number okay so a complicated B to bet on black or red so for example this is a red number it's a black number it's another great number and so on and so forth okay now here's the thing many people think that if they make a bet with the casino they've got a 50/50 chance of being right well they are wrong it's not a 50-50 chance because the casino has rigged the game in such a way that they are all together 18 red numbers 18 black numbers similarly 18 even numbers and 18 odd numbers but they are two green numbers which are the zero and a double zero disagree okay therein lies the secret so this what happens for example if you bet on black what's your chance of being right your chance is 18 because they're 18 black numbers out of not 36 38 right because they're 18 black 18 red and 2 green numbers so and the casinos chance of winning is 20 out of 38 because if the ball lands on the green the casino wins as well okay so if you work it out the players chance of making money is about 47.3% the casinos age is 52.7% so what is the casinos H over the player the casinos H is fifty two point seven minus forty seven point three that's 5.4 percent there you go so the casino has got a 5.4 percent edge over the player and that's how they make all the money at the end of the day so what does 5.4 percent mean it means that in the long run over many many bets for every $1 that people bet in the long run the casino will make 5.4 percent of their money which is five cents five point four cents right and if a million dollars are bet in the casino the casino may on average fifty four thousand dollars so the more people that play the more people that bet the more money they make that's what happens now let me explain this experiment in another way right for example if you've got a thousand bets and each bed is a thousand dollars the million is bad right million I was bad right great and statistically out of a thousand beds the casinos gonna win 52.7% the players gonna win forty seven point three percent right so that means the casino will win five hundred twenty seven beds and lose 433 bags right now each time they bet they win a thousand they lose they lose a thousand right so this is a thousand dollars so they make five hundred and twenty seven grand they lose four hundred and seventy grand right so this - this is you got it fifty-four thousand dollars that's how it works so now I'm gonna teach you as professional traders how do we replicate the business model of the casinos but first of all let me tell you why most people who trade the stock markets will all lose money I repeat 90% of people who trade stocks will lose money just like the players who go to a casino and the reason most people will lose money is because they do have a plan they don't have a strategy right they buy based on rumors based on emotions based on opinions based on tips right so to most people when when you buy a stock what's the chance of them being right 50/50 right it's random it either goes up it goes down now Mesa enemies if it's 50/50 is not that bad well actually it's worse than that why remember that when you go to a casino you bet a dollar if you lose you lose a dollar if you really win a dollar right so you're risking one to make one correct but for most people when they go into the stock markets the trouble is because of their emotions they lose more when they are wrong and they make less when they are right let me give you an example so most people what happens is if they buy a stock say ten dollars Ryan they say it's gonna go up yes you know I believe it's gonna go up right and surely if it doesn't go up right it goes down and what happens right they say we'll come back tomorrow you'll come back tomorrow and come back tomorrow and they keep holding on to a loser till it loses big they get a big fat loss yeah and most people when they buy a stock it starts going up by a bit say 1100 you know they meet some money and they said let me take my profits before I lose it and they take small profits okay so most people because of instant gratification the moment they make a bit of money they want to sell in picking off the markets right so the instant gratification causes small wins small profits and the fear of losing money causes people to not want to cut their losses so when they make a loss they say you know it's gonna come back it's gonna come back you know let me give it some more time I'm gonna have hope right and a small loss balloons - a large loss so it's a result most people win small they lose big and they are right half the time so you do the math in the end they always lose money nice professional traders we always make money at the end of the day how do we do that we replicate the business model of the casino so I explained how the casinos rigged the game in order to have a statistical edge over the player right now I'm not too sure how it's professional traders we rip the games we read the stock market legally of course right so I can mention most players when they buy or they sell a stock it's a 50/50 chance it either goes up it goes down but it's professional traders what we do is we study the markets we look for repeatable price action patterns or require technical analysis and by applying these price action patterns that are repeatable we are able to enter when the statistical itch is in our favor so let me give you an example when you look at a stock market basically there are three things that couldn't happen in the stock market okay the market either goes on an uptrend it goes on a downtrend or it goes sideways okay so I'm just gonna focus on uptrend and sideways I'm gonna do this in another video all right so if I notice that a stock is on an uptrend for example now on an uptrend you notice that a star doesn't go up in a straight line right it goes in wave patterns right or call an impulse correction empowers correction impulse correction okay and often times when it corrects to a support level we call this an a moving average or support level and you see this very repeatable wave pattern it hits that level it bounces up what you think's gonna happen duh it's probably gonna go up right so as professional traders that's when we buy because on an uptrend when the price is a support level after retracement there's a high probability that is going to go up now is it a guarantee is it a hundred percent is gonna go up of course not right it could still go down but when you enter at this repeatable price patterns the chance of it going up it's more than 50/50 it's not a hundred percent but let's take it as a 60% chance it's gonna go up okay or even fifty five percent whatever it is right of course there'll be a forty percent when it fails and the trend reverses into a downtrend okay so say forty percent you lose and sixty percent you win okay once your age your age is you will 60% you lose 40% your statistical age is 20% this better than casino the casinos H was only 5.4 percent and they make billions or hundreds of millions whatever it is right by self professional trader your itch can be 20% now even if you are right only 55% of the time some people say there's no big deal but and you are wrong 45% of the time hey that's still a 10% age so being a professional trader is better than owning a casino if you think about that way now here's there the best part as a casino when you bet if the players you're betting one-for-one right if you lose you lose $100 if you make you make $100 by professional trading we never bet one for one we always bet at least one for two in other words we always respond to make two dollars or more how do we make this happen by placing a stop loss to guarantee how much we're gonna lose and a profit target - currently how much we're gonna win when you're right so let me draw this again now in this case let me show another example in this example the Mac is going sideways usually when a market goes sideways is in a range my master in a range right so hits were called resistance support resistance so you have to see this repeatable price Bethany doesn't happen for every stock it doesn't happen every day but when you see it you can trade it we only trade when we see a repeatable price pattern alright so for example say this is 10 bucks and this is 15 bucks right so the price hits this support level and what what is gonna happen right door is gonna go up there right so we're gonna buy here again is it a guarantee is gonna go up now it's just a probability it's better than 50/50 chance right but based on these three people price path and say the chance of it going up is 60% chance and the chance that after I buy it dies it's a 40% chance we'll lose now here's the difference so say I buy it at $11 what do I do I have to place what I call a spot loss order a stop loss that says hey if it goes to $9 sell it immediately I cut my losses right so if you do that how much will you lose when you're wrong you would lose $2 so by placing a stop loss you guarantee how much you are gonna lose me know when you're wrong right and you just have to make sure that the distance from your entry price you're buying 11 to the top of the range say this is 15 right so if you goes from 11 to 15 how much you may you may $4 so you're risking $2 to make 4 bucks another way of saying it is you're risking 1 to make 2 you're risking 1 to make 2 with a 60% win rate and that's how you rip the game of the stock market now if you do this consistently in other words out of for example a hundred trades now I do about 20 traits a month on average so it takes me about five months to do a hundred trades ok up 100 trades again my win rate is say 60% win rate so I'm gonna win 60 trades I'm gonna lose 40 trays okay now each time I lose I lose $1 right or whatever I'm willing to invest or tray when I win I win at least $2 right why because like I mentioned we fixed our stop loss and our profit target and we only take the trade if we have a risk to return ratio of at least 1 to 2 so what happens now okay so I lose $40 I make $120 so you do the math what's 120 minus 40 80 bucks so I know that you see whenever I make a trade I've got no idea where there is a win or loss in a short term I may have a losing streak I mean may have a winning streak that's called luck okay but over many trades of at least a hundred trades for example I know I always win because of the statistics being in my favor I'll make 80 bucks in other words if I'm betting $1 for trade and I'm betting a hundred bucks I'm getting 80 bucks back that's an 80% return okay in 100 traders about five months okay now of course there's no guarantee they're gonna win 60% now what if the worst case no happens and you get a say get a string of bad luck right and your win rate only goes down 50% if your win rate goes down 50% it means that up 100 trades you win 50 you lose 50 right but because of the risk to return ratio the way we rigged the market guess what we are losing 50 bucks but we are winning double we are winning a hundred bucks so net net I still make $50 out of our hammer dogs are still 50% return so that my friend is the essence of how professional traders we rigged the stock market so we always make money consistently at the end of the day and that's how we grow income and our wealth hope you enjoy that

Channel: Adam Khoo

Views: 3,181,663

Keywords: adam khoo, adamkhoowealth1, wealthacademySG, stock trading, stock investing, technical analysis, ETFs, exchange traded funds, CFDs, wealth academy, AKLTG, stock trading strategies, stock trading for beginners, trading psychology

Id: bRCtBRsLPmk

Length: 16min 53sec (1013 seconds)

Published: Thu Feb 02 2017

Reddit Comments

[u/zimmertrading]

His ideas are on the right track. Trading is a game of numbers — your job is to identify an advantage and then trade that advantage over and over again. The casino’s performance is consistent whereas the gambler’s is erratic. If you want to be consistent in trading you need to think like the casino: after ‘x’ hands of blackjack we will almost definitely be positive. If I take this profitable setup I’ve tested 1000 times I will almost definitely be positive. You can’t control your results as a trader but you can certainly put the odds in your favor by managing your trading business like a casino.

[u/__Captain_Autismo__]

I’m not watching this right now but if he’s talking about risk management that’s the way player

[u/jayelectric]

I watched him a long time ago and I like the way he explained his strategy. It was very clear and concise and in the end, it works for him. He shows backtesting and real results I think in this video or a follow up video so I think he is 💯% legit.

[u/TheWaterJesusWalked]

Idk what the video is talking about but im going to assume that hes talking about selling options or credit spread options which is truly the highest probability and most consistent trade that you can make

[u/Thron3d]

The math is clear and right!!! You cant debate math!