hey everyone okay today we talk about bankroll management bankroll management is kind of the thing that separates a lot of people who are trying to be pros on aspiring pros and day trading uh from the actual people who who are pros and uh this is quite a staggering difference um when we actually look at how many people go from uh learning technical analysis and uh actually turning themselves into pros right you have kind of two different worlds in uh in day trading you have the theory and practice of actually doing it every single day and then you have the technical analysis right so everybody here knows the technical analysis part of that that's all fantastic that's all great we all know what we're doing there but the uh harder part of day trading is actually getting to that point where you can profitably trade on a on a regular basis so bankroll management becomes a huge uh part of your world in day trading bankroll management actually becomes one of the things that separates people from being professionals and and non-professionals this is quite similar to bankroll management in poker a lot of ex-poker players are now day traders and a lot of day traders use these same principles so we're going to talk about some different bankroll management techniques and some different practices that i like to employ and some things that will help you guys understand how to do this long term as a career and kind of that missing piece for a lot of people so i am going to [Music] bring over my binance screen here and we are going to look at some live trading here i have put 500 in my account here and i'm deciding to trade futures here let's say i have 500 in my account okay so let's take a nice jolly number and that's why we use 500 just because i think this is a starting number that a lot of people who are trying to day trade start with or it's a good practice number to see exactly what you can do right so this is kind of a good starting point for us today start to dissect and develop a bit of a better understanding of bankroll management okay so the first thing we need to do is talk about account size all right so your account size in day trading is going to play a big part in what you are actually trading and if you're thinking a big part in terms of oh if i have more changes the way i trade that's absolutely incorrect okay the more you have in your bank account and the more you have in your bank roll it doesn't affect anything about proper procedural techniques right proper procedure when we talk about bankroll management unless you guys are trading like here here's an example here this person has 14 bitcoin in this trade this is not a lot okay you see if we are on uh 100x leverage and we simply slide our 500 over we have six bitcoin here right so let's look at these books for a minute not that i ever study the books but i want to show you guys as an example this person here has 27 bitcoin this is nothing but a 2500 trade that's max leveraged so forth and so forth now maybe let's go and do this check the sell side see if there's anything really notable no there's not okay let's change the amount here so you have 21 bitcoin here that's not enough to make any difference in the market 175 000 is nothing that's pocket change for people this 52 bitcoin wherever it was there right here 400 000 that's nothing until you start seeing orders in the 500 plus bitcoin range these are the things that that aren't affecting the markets okay so you guys trading with 500 or 5000 or 10 000 leverage it's not it's not doing much in terms of books so if you guys are thinking that your account balance affects the way that you should take trades you'd be wrong your account balance can never reflect the way in which we look at trades and take different trades right this hundred and sixty thousand here holding an upper now is 126 means absolutely nothing okay so first and foremost bankroll management it's important to know that that affects absolutely zero how much you're trading with you could be taking five dollar trades fifty dollar trades five hundred dollar trades five thousand fifty thousand five hundred thousand they don't matter maybe if you were to start leveraging like 100 000 on 100x you would be making a dent but that's that's quite a different scenario than most people are trading right okay so let's not worry about that let's just again use this time to focus on proper procedure so let's start with the basics here we have a 500 account here right now okay uh well it's 532 because i took a quick little scalp trade and i made i guess eight percent on it right before the video started just to make sure everything was working perfectly fine here for the video and it worked so let's talk about the way in which we handle our our bankroll okay first and foremost if i have 500 dollars that i am playing with in in my trading now whether i'm trading all coins or leverage trading or margin it doesn't matter if i have 500 dollars here that i am playing with okay it means that i should have somewhere between 20 and 40 actual reloads right buy-ins or reloads or whatever you want to call them that's proper procedure 40 40 is a bit much that's kind of a standard that's used in poker because you can go on what's called random swings because poker is a game of chance there's skill involved of course and there's advantages statistically but with technical analysis if you're making mistakes you have to stop and just say oh why am i making mistakes right so we're going to put up an order here at 85.75 and we're going to go 50 on this order and hope that we get um filled on what we want to do right so we're going to go i can't quite get there 53 dollars so we're going to go and we're going to risk one-tenth of our bankroll on this position okay so that would be one way in which we can do it the other way is if we had 20 buy-ins we could go like this and use the fall amount so here we're going to do that we're going to put an order up and hope we get filled we're buying a level from the past here and if we do great if we don't that's quite okay too right so this is kind of the separation of what you need to know when you're talking about bankroll management okay you need to be able to say okay i've got 500 and i should be able to in theory if i lost five hundred dollars here i should be able to go and put in another five hundred dollars non-stop you should never if your account size is only five hundred dollars you can't be trading with your entire account size okay you have to be able to lose trades too sometimes it happens it's the way in which losing trades will help us go and look at okay why did this trade fail and if you're losing one or two trades and getting a good trade or two two good trades and you kind of have this 50 50 ratio where you're not really moving it means that you don't know how to handle your losses there's a pretty interesting way that the markets and day trading as a profession works okay so let's just quickly look at what i'm doing here on my trade so i'm just simply buying this whole level back here at 85.68 maybe we'll change our order a little bit i didn't realize it was that high so we're actually going to set this as by long at 85 let's go [Music] 85 ah 70 51. sure let's pick an arbitrary number and we're going to say by long right so our position got filled we're going to see what happens here now with this right and we're going to want to sell here up at 8 600. 85.99 is where we are going to sell and we'll see what happens we hit our hold level and we are looking for the push up to this level here right so we're just gonna watch this trade for a minute our order did get filled fifty dollars of profit we could consider closing here i think we will i think we will close [Music] here okay try to get our order close here and there we go so we just did a few minutes trade made ten dollars great and so this is obviously i would typically be holding this position a little longer but for the purposes of this video i do want to just take this trade execute it show show a quick execution of a trade that you would take on a level right so again this this is not a demonstration for profits this is simply just a demonstration for okay this is what we would do we would buy this level and we can actually just set it there again if we wanted to so so this is a way we can trade and again this is this is not meant for profits in this video this this is just to show you guys and i don't want to get bogged down worrying about making and taking trades here and losing focus so this is why one of the reasons i got out of the trade not much profits in it but hey it's 20 that we made or 10 or 15 or whatever it is i think we were at 523 and now we're at 543 so we made 20 on a 500 trade which which is not bad actually it's not great but it's not bad so ideally we would have liked to sell up here at this level but again for purposes of this video it's uh it's not what we're doing getting back to it this this was quite a simple trade um we saw the whole level here we uh we did the knife catch on it you know a few dollars over top of it we went we caught it within a dollar too so so typically you would you would ride that trade and you would set a stop loss and you'd be more involved in the trade and managing it and and so forth and and fine you can take your profits but what i want to talk about is there was two ways i could have taken that trade okay so i have a 500 account there the thing is is that i can risk 500.00 if i have a lot of experience doing this okay i have a great set of conditions that i follow saying if i'm if i'm starting to lose money or if i'm starting to make errors in my judgment and this is where i can go back and look at if i had technical flaws or if i had procedural flaws okay so procedural is oh let's buy a level let's sell here we got too inpatient we just wanted to trade to trade this this is procedural technical analysis is different technical analysis would have been marking this level incorrectly so we marked our level perfectly we uh bought it 87 sorry 8570 in one cents right and the candle itself 85.70 so we actually got within one cent of of our actual trade so right now we would have been within one cent and we would have been in great profits here so so that's that's fantastic we would have made 30 or 40 percent on that trade and we would have made a few hundred dollars procedurally we had good bankroll management because we didn't want to take a tap hazard trade we have to have a reason to get into this trade right and technical analysis wise we marked the correct level we sold too early obviously but we don't care about that that's the purpose of this is to make this video right we sold the correct level and then we would have had our trade executed perfectly fine so this is something that has worked in in both ways now we're gonna get back to bankroll management for a minute here when you are trading the lesser experience or the the lower amount of experience you have day trading okay the less you should be risking in your balance rate here so so the balance that i have in my actual account so right here what you're seeing on the screen down here this 544 dollars you should be risking less the technical analysis side of of day trading will give you your your ryman reason and answers okay so technical analysis will tell you buy here sell there you know again plotting this trade we got within what what is it two cents we got within one cent of the perfect level because this is what we want 85 701 and hit 85.70 so we got within one cent which is you can't get better than that and it was six bitcoin so i pretty much bought the bottom of this move and and i would have sold here at uh 8600 had i not been recording the video right so so we actually make something about 30 points on this trade so 30 would have been a nice trade we made a few hundred dollars in a few seconds okay so i am doing this on this video okay because my technical analysis is highly refined so this is something that you have to use the way in which your trading schedule and your trading acumen is is developing over time and and how you're seeing your trades go right if you're noticing that you make money lose money make money lose money you either have a flaw in a procedural or you have a flaw in your technical analysis okay so the more you're making mistakes the less you should risk right here now let's go back to the numbers for a second okay i have oh let's use a color that we can actually all see on the screen okay we're going to use a nice bright yellow so i have and we'll delete this and then redraw it you know we'll use the text tool that's even better i have 500 dollars in my active trading account okay so in my active trading account i have five hundred dollars like that we're going to put this yellow so we can see i have 500 in my active trading account this active trading account means 500 in this balance right here okay so so that's what that means we have 500 in in this balance right here this isn't our total bank account we should be backed by 20 times the amount so that if we lose this 500 right if we lose 500 we still have an a 10 000 account so we have split the 500 positions into 20 possible losses so we would have to actually completely disregard all technical analysis all bankroll management we'd have to completely disregard everything we know about day trading in order to lose that amount of money so if you had 20 buy-ins that you lost this will tell you a great deal of information about the way you're trading it'll either give you the reason why you're failing technically or it'll give you the procedural reason why you're failing so i have okay so let's go back to this trade here i have procedurally made a mistake in my trade that i took right here now this is kind of done purposely for this video to show you guys what a procedural mistake is okay my technical analysis was correct i bought the right level i bought it within a cent of the actual price that it was going to hit you know experience dictates why i bought there and some other things but not the focus of this lesson this wasn't a technical flaw because i actually had the right levels okay so we bought here at the exact oh let's take that magnet tool off it's going to disrupt our video here so i bought here and i said i was going to sell here this was perfect i sold here because i was like oh let's just get out of the trade because i don't want to be tied up this would be a procedural mistake because technically we understand what we were supposed to do we were supposed to buy here and sell here this was very simple buy there sell there our 520 dollar bank account instead of being 540 it would have been about 720 or something in and around there okay it would have been much greater than oh no it wouldn't have been that much actually what am i saying it would have been around 600 and 650 660 something like that i'm just taking a quick guess on the math and and then we would have reshorted this level here to relong this level again possibly we would have exited our short so we would have taken a series of trades here that made a lot of sense okay so this is a procedural mistake where i bought the right level i saw the right level to sell and i sold too soon or too late this is a procedural mistake so when you were talking about bankroll management every time you get into a trade not only are you paying fees but you are also taking a risk so if you are taking this kind of risk and saying oh i'm buying here you have to be laser accurate on your cells and you have to be able to say could have actually sold this level here you have to actually not only be accurate on your levels but you have to also trust your your technical analysis that is a procedural mistake that a lot of people make they are going and they are selling too quick or holding too long not recognizing failure not waiting for success to happen we bought the right level to the scent there was no reason to sell early this was a procedural mistake okay so this is procedurally something that should not have happened what i should have done is i should have just set my cell here and just waited for it to happen and set my stop right there right so so my losses are very limited right set a stop limit order my losses are very limited i've procedurally done the right thing and i've made money and gotten rewarded because of it that's the difference between procedural and technical okay so 500 in my account that means that if you lose that 500 it doesn't mean your whole account is gone okay so if you have a 500 account you should be trading with 25 positions okay and then you should be breaking those down into positions so again let's just just to reiterate reiterate the reiterate wow reiterate the first point if i have a 500 amount in my active account that means i should have 10 000 in my actual account right which is just divided by 20 right this is 20 500 positions so in total we now have ten thousand and forty four dollars so so we'd have nineteen thousand five hundred left five hundred in our active account and if we were to manage to lose the entire account then that's fine the active account we can just reload it with our with our actual account right there's no loss there the benefit of this is you can't really make mistakes this way because this right here as you're using this slider based on how much risk now it doesn't matter if you're trading this it doesn't matter if you're trading all coins you could be going and trading xrp on non-leverage or you could be going trading bitcoin cash or or eos or or any one of these coins or maybe something doesn't matter maybe because it doesn't have leverage right or or maybe you're trading gold or silver not on contracts right it's the same thing this slider just is a good example of a good visual example for risk in this video right so in this scenario i'm using my full 500 dollars to take positions and that would be something where i say this is where i want to gauge how comfortable i am trading so in this particular trade i'm very comfortable with it i'm very comfortable in the trade so i was able to just slide up to 100 maximum a few second trade bang make my money and i grew my if i would have left it to where i was supposed to without making a purposeful procedural error or a procedural error i would have grown my account 25 in in minutes right so so that's a very good result okay so this is a great result this is fantastic you've done your job properly technically and procedurally you've made all the right decisions okay so this is fine if you manage to liquidate your account here which actually should never happen you should be out long before liquidation call you should you should never just let it ride until it gets liquidated that's a huge mistake i see people make even even if you're one you know one dollar away from being liquidated if you close your position before getting liquidated you're gonna save yourself a lot of money it's just the way contracts work if you liquidate your account it actually takes your margin ratio and and takes all your money right it's an important thing to know this is the way we have to look at bankroll management we have to take our account size right and if this was a hundred thousand dollar account you would just add a zero to your active amount too so then instead of if if this were a hundred thousand dollar account you'd simply have a five thousand dollar active trading account and uh the difference between active and actual account should be split in into positions because this allows for the natural growth of making an account quite simply in in day trading the amount of money you can make is endless but what can't happen losing accounts because procedurally you don't know what to do so this leads me to one of the most important points i can talk about with bankroll management okay let's say you make one good trade one bad trade and we're gonna use ones and zeros for this kind of like binary code one is going to be a good trade zero is going to be a bad trade okay so good and bad make a good trade you make a bad trade you make a good trade you make a bad trade you make a good trade you make a bad trade and so forth 50 50 therefore putting you in this position of neutrality therefore you make money you lose money you make money you lose money you're kind of always break even and sometimes you edge out your profits so you kind of start to find a way to you know get bigger profits off this this is not correct okay you will make twice as much money actually limiting your losses then you will actually making good trades so when you start to take these bad trades out this should be everybody's main focus is reducing the bad trades that we do okay so what does that mean that means looking at how you've been trading okay analyzing what you've been doing and looking at the mistakes you've been making and being honest with yourself because the thing about bankroll is it's very egotistical okay bankroll management is the thing that breaks and makes traders because it's a battle of egotism right it's a battle that people have with themselves or they think they're above it they're beyond it right what i see a lot of brand new traders do is they lose 40 and then they think they can just make another 40 to equal that up that's not the way math works if you lose 40 it takes a lot more than 40 percent to make back that money right losing 40 percent of a trade and then trying to make 40 back is not going to equal to the same spot so not only do you make the job on yourself harder so when you lose trades you actually make the work to have winning trades mean less so you actually make your your job quite a bit harder it scales up the difficulty in growing a bankroll and and starting to have a position right and starting to take profits out of your active account because if i build my active account up to fifteen hundred dollars i can simply just take up money in that account put it in my main account and and sylvia and we're going to talk a little bit about that later but the the thing that we're the thing that we need to master is reducing these bad trades okay taking out these bad trades you will make twice as much money in a year by having no negative trades then you will focusing on making good trades and and the right decisions that lead to oh i just made 50 i feel so good it's easy to make money in markets it's hard to not lose money in markets that's the difference okay [Music] this is just human error this is just the way we are when we make bad decisions emotions come into play procedurally we're making mistakes technically we're making mistakes and we get in very unoptimal positions that lead to devastating results very very straightforward ideology the problem is is that those bad trades they actually equal a lot more than the good trades again so the the goal of bankroll management and the goal of dissecting procedurally what are you doing the goal of dissecting technical analysis what are you doing is to start to take away these zeros is to start to take away these bad trades if you were to all of a sudden let's say this is an unneutral position okay you took away good trade bad trade good trade battery good trade bad trade and you ended up with a a straight across balance because you started with a good trade okay what happens if you start with a bad trade same exact scenario but you've actually lowered your account balance before taking your good trade like this so all you've simply done is is the same good trade bad trade good trade bad trade you start out with a bad trade you're actually losing money long term because by starting out losing x amount of percentage this good trade doesn't get you back to neutral this good trade actually gets you to a spot where you're less than what you started with and then this compounds and this compounds and and actually good trade battery good trade battery goodrich bad trade a one in one scenario only makes you even when you start with a good trade and then you have a badger and then you you end up now in a neutral position the other 50 of the time if we're just going based on the statistical numbers like just the one to one fifty percent of the time if you start with a battery you're actually losing money so so you're losing money even even if you have a fifty percent ratio right even if you go trade battery get your patrick you're actually losing money so so this is crazy because it's actually skewed against you to be completely neutral to be completely random let's say you knew nothing about technical analysis things could go up or down and you just randomly pick i think it's going to go down for no reason you don't know what you're doing 50 50 is actually less than 50 50. so so this is not yes it has a 50 chance to go up or down but you are losing more money than you're making on that 50 50 call so it's very interesting the way it works so if we were to even take out one of these bad trades let's let's now talk about reducing the bad trades that we have let's say we take out this bad trade we have good trade good trade bad trade good trade bad trade okay this is also working slightly against us because if we were to use the entire balance here again we have good trade good trade our account balance goes up quite a bit the bad trade here this one bad trade equals more losses so if you made a hundred dollars here and a hundred dollars here and equally you were to risk the same percentages instead of losing a hundred dollars because this is a hundred well let's do that properly here this is 100 this is 100 right this would be something like 140 negative so you see you're you're still skewing yourself against making money in in bankroll management sense right you're still getting okay let's make this clear that's a four like this okay it's a four it's a little sloppy but that that's a four you are still being skewed against losing money using the same statistical results you see no matter which way you look at bankroll management you'll always lose more than you make unless you're always making money and it's compounding for you the losses will compound again