The Hidden Reason Stock Traders Fail

The Hidden Reason Stock Traders Fail

Raise your hand if you know everything about trading, you've studied hard, watched thousands of YouTube videos but you just can't seem to get profitable.

Today we're going to discuss something new.

Today we're going to fix your trading and when we do you'll never again hesitate, and even better, you'll wake up every day expecting to make money...

The concept of ten perfect trades.

Extremely simple math, and one really incredibly important belief. Here's what I want you to do. Let's assume for every 10 perfect trade you identify, trade, and manage correctly, you will earn consistent money. So let's visualize it.

Close your eyes and say, I have this perfect system. It works. All I have to do is follow it. Before we moved forward something needs to be said and it's very important. Virtually every single trader that I've worked with over the last 23 years makes this mistake.

Everyone says the same thing. When I follow my rules, I make money. When I stop following my rules, I'm throwing money away and it's my fault.

Everyone says the same thing. When I follow my rules, I make money. When I stop following my rules, I'm stupid. I'm throwing money away and it's my fault. So let's believe this first quote here, let's assume you make 10 perfect.

If you do, you will earn consistent money. Okay, now we have no idea if the profitable trades will be the first, the third, the fifth, the seventh, and the ninth.

And the even numbers will be the losing trades, and I'm just using five as an example here. It could be three trades and the rest will lose. It doesn't matter. All we know is that if you identify the trades and manage them profitably, we don't care which of the trades make money. We only need to know that every 10.

Did I do what I was supposed to do? It's a nice, tight, close number because numbers scale. If you do what you're supposed to do on 10 and do the same thing on a hundred, you'll get bigger results in the same way. We don't know if it'll be trades one through five or trades through six through 10. All we know is close your eyes and visualize order flows, saturation points, did I do what I was supposed to do over 10 trades?

That's how simple trading can be, but we tend to make it more difficult than it needs to be now. But you have proof of your track record. So if we make 10.

We don't care which of the trades are profitable, but our track record, because we traded it and now believe in order flow, which is why we expect to make money and why you follow the strategy trade after trade because you actually traded it, right?

What's next? You believe our edge works because you have proof. So visualize now, like I'm, hopefully if we start working together, you'll get this.

You make 10 trades and you look at them and the first thing you evaluate is, did I make a perfect trade? Now, think about what I just said. I did not say, did I make a trade that made money?

Our focus is on perfect trades following the order flow, which means we're following the big money. They are the ones who move the stock around. All right, so over 10 trades, over 10 perfect trades, the odds are you will make money provided you follow the order flow. Okay? So that's what 10 perfect trades mean.

Simple math, 10 trades follow the order flow, prove you have a track. , and then you expect to make money because it works and because you believe you can follow it. That's the process of 10 perfect trades. It's not hard to make 10 trades.

You can think of, you can make 10 trades in a morning if you're an active trader, but you have to say to yourself, was it a perfect trade?

So 10 perfect trades when your edge does the work. So the 10 perfect trades, the order flow, the saturation points. Now again, I just happen to make these five green and five red. That doesn't matter. It could be three green and seven red seven, it doesn't matter, right? T

he point is some of them made money, some of them lost money, but the most important part is the fact that it was 10 perfect trades.

So over time, over 10 perfect trades over order flow, your edge does the work. Now, here's where traders get messed up, but before we get to that win loss percentage does not matter. It doesn't make a difference.

What matters is did. P&L, did your profit and loss go higher? That's what matters. Don't get so focused on, I have a 80% win loss percentage, a 87%.

It doesn't matter. You could have a 95% win loss percentage. If you lose it all on one trade, who cares? You had a 95% win loss percentage. It's about making perfect trades and then managing them correctly. So let's take the opposite of 10 perfect trades. Let's assume for a second you make 10 trades, but only six of them are perfect.

Now let's be clear on what it means that it's perfect. It means it was with order flow. It was in the right stage of your saturation points, meaning there was room to go. That's what we're looking for. So any trade that does not match that. Is not a perfect trade.

So now perfect trade implies we have a good probability, over 10 perfect trades to make money.

So let's assume 10 trades, but only six were perfect and matched our edge. So right out of the gate, four of those trades are wrong, flat out wrong, right? So for our edge to work, you must now place four new perfect trade. to get back to the perfect 10, right? But this means you now must make a minimum of 14 trades to get profitable.

Let that sink in, especially if you've been trading for a while. Cuz if you've been trading for a while and now you've got to the point where you're like, I keep fighting myself to get profitable. I make money. I don't make money, I make money, I don't make money. This is. , this is exactly why, and the next slide is gonna really drill it home for you.

So every trade that you make that is not perfect, you are literally pushing out further how long it will take for you to be profitable. Think about that. The very definition of having an edge in trading means over time, if you do what you're supposed. You will come out ahead. I've scrunched that all the way down to 10 trades.

If you do what you're supposed to. Over 10 trades within those 10 trades. With order flow, with saturation points, you should make money If you have an edge, which my edge, I know it works because I've been using it for years, but. If you make 10 trades and four of them are not perfect, at a minimum, you now need to make four more trades to make up, to add back into the probabilities.

That's the point that we want to get across. So what does that look like? So what does this mean to you? Literally, what if you place four out of 10 trades that aren't perfect? So only four outta 10. That means six aren't good. Now you are at 16 trades to try and accomplish what you wanted to accomplish at 10.

Think about how simple this is, but it's mind blowing. You are literally pushing out. You need more trades to make money just because you didn't make a good trade. So this is assuming that any of the non-perfect trades were not bigger losing trades than. Then you have to force bigger profits on your trades to make back the bigger loss.

You probably revenge trades. You probably take mediocre trades. You probably end up trying to short a stock that's going higher, hoping it comes all the way back down. You make a big windfall profit, you're literally shooting yourself in the foot. So what you need now is you need bigger profits, which usually makes you an emotional mess.

I've been there, trust me, I can't even tell you the amount of times I sat in bat by my screen and said, please just come back. I promised my next trade I will be exactly what I'm supposed to be. Now, here's where hopefully this visual will really tie it all home for you, right? So this is the single biggest reason that smart traders fail.

Now, if you're listening to this, you're putting in the time. I'm sure you're a smart trader, right? Every trade you make, that is not a perfect trade. And again, we're only talking about 10 perfect traits. You have a really small batch of numbers to say , I did it.

Or you could say, Nope, trade two and six. What was I doing?

I was shorting a top. I was catching a falling knife. You are literally pushing yourself further and further from profitability, which means you are intentionally pushing out your learning curve and pushing out how long it could take you to make money. But when you understand 10 perfect trades, when you understand order.

you shorten that learning curve dramatically, and here's what this ends up looking like. You have 10 perfect trades. If you make 10 perfect trades, everything looks great. Within those 10 trades, the probability plays out. You manage them well.

They're easier to manage because you recognize order flow. But if you don't, all of these other x-rays start popping in there, and now it can literally become this endless cycle where you will never get profitable because you keep messing with the probabilities.

You keep messing with trades that are not perfect because you're bored because your last trade lost money and you're trying to force the next trade to make money because you're angry with your husband. You're angry with your wife. Somebody spilled coffee on you this morning, whatever. You're distracted.

Somebody's sitting next to you or somebody in a chat room called out a trade that he just found on a scanner somewhere. All of these trades start to come into the equation right now, and instead of just these 10 perfect trades and every 10 trades you can look at and say, did what I was supposed to do, I made money.

You start to throw in all these other garbage trades and now it's 25 trades later, and you'll keep pushing yourself further away from profitability.

This is the sole reason that you can know everything about trading, but never get profitable. You're messing up your edge.

Pete Renzulli

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