Transcription
Trading has one job, just one. Not to make you money. It's not to help you learn. It's to convince you that it's complicated.
Two traders. One wins 40% of the time. The other wins 80% of the time. But the real question is, who's making money? In this scenario, it's the 40% trader by a mile. Take a second with that. Because everything the trading industry has told you about needing a high win rate, that table just broke it.
Now, let me show you what this looks like across real trades, not a table. Here's an actual trading journal. 50 trades. Trader A has a 71% win rate and looks incredible on paper. Trader B has a 38% win rate and it looks like a disaster, but trader A is averaging winners of a 6R multiple and losers of a 1.8R. Trader B is averaging winners with a 3.1R and losers of a 1R. After 50 trades, trader A is down 11R where trader B is up 47R. Same market, same time period. The only difference is what each trade was worth.
And this is why traders who seem to be doing everything right are still losing. Their win rate might be high, but their ratio can be way too backwards. And this is why traders who seem inconsistent taking more losses than wins can actually be quietly profitable every single month. Now, the win rate can almost become meaningless. The relationship between your wins and your losses, that's everything. And a lot of traders were never taught this. And in a few minutes, I'm going to show you exactly why.
My name is Chris Dale. I've been trading for 15 years. I built the VWAP wave system and I wrote a book on it. And I've worked with hundreds of traders every single morning during live daily trading sessions. Everything I trade, every single setup runs on three variables. So here's what the next 20 minutes is going to give you. Three variables every profitable trade depends on. One question you ask before every entry, no exceptions. One sizing rule that keeps you alive through any losing streak. and three real chart examples showing you exactly how I read the market before I ever think about entering. This is not theory. This is math and it's applied to real trades. So, let's go.
The three variables. Every trade, every single one you will ever take comes down to exactly three things. Probability, which is how often you are right. Risk, this is how much you lose when you're wrong. And reward, how much do you gain when you're actually right? This is the entire game. Every indicator, every pattern, every strategy, they're just tools to help answer these three basic questions. And the industry sells the tools as if the tools are the answer. And they're not. The real answer is the actual math behind them. And the VWAP wave system is the specific framework I built to answer all three. Every session on any instrument and any market condition. It tells you the condition before you enter, where to enter, and exactly what the trade is worth. That's what I'm going to show you in the chart examples later. But first, let's talk about the math foundation. Because without this, the setups mean absolutely nothing.
Asymmetry game. So, here's where it gets interesting. You don't need to be right as often as you think. You just need to be right bigger than you're wrong. At a 1:1 risk-to-reward ratio, you need to win more than half the time just to break even. That's simple casino math. The house edge at 1:2, you only need a 34% win rate. Lose two out of three and you're still profitable. At 1 to three, you only need 25%. You can still lose three out of every four trades and still make money. Think about what that means for how you've been trading. If you've been cutting your winners short and letting your losers run, even at a 70% win rate, it will destroy you. You saw it in that journal. If you protect your losers and let your winners breathe, even at a 35% win rate, this will still build your account. The market really doesn't care about your psychology. It responds to the math itself. So, why does everyone obsess over win rate? It's because losing trades feel like a failure and winning trades feel like a success. But the market doesn't grade you on how often you win. It grades you on what those wins and losses were actually worth.
Before we go any further, I want you to drop in the comments right now. Which one is you? Are you chasing a high win rate or already thinking about the ratio? I read every single comment and I want to know where you're at.
Risk, the only thing you control. So, if you don't know already, you cannot control the market. You cannot control whether you win or lose on any given trade. But there is one thing you control completely, and this is how much you will lose when you're wrong on a trade. Now, most traders treat this as an afterthought. They pick a stop that feels about right and hope for the best. But this is not trading. This is gambling with a brokerage account.
I'd like to do a quick pause here. If you're serious about becoming a consistently profitable trader and you want more than just free content, the Dale Inner Circle is where I work directly with traders at a much higher level. This is for traders who want structure, accountability, deeper system training, personalized feedback, and a real plan to improve, not just more random information. So, if that sounds like you, be sure to get on the inner circle wait list now. spots are limited when I open it back up and the weight list gets first priority. Be sure to check the link in the description and put your name on it.
So, here's the math of staying alive. If you risk 2% per trade and you lose 10 trades in a row, you're going to still have 82% of your account. Still breathing. The math still has time to work. But if you risk 10%, four losses and you've already lost a third of your account. Seven losses and you're below half. You are now making every decision likely from desperation. And desperation leads to destruction. Math doesn't care if you're desperate.
So, here's what most traders never understand. It's not the losses that kill you. It's what you do afterwards. So, when you're down, then a lot of traders start to begin chasing. They'll risk more to make it back faster. And then you can lose much faster. And this is a complete death spiral. And it always starts with one oversized position. Annoying keeps you rational. Devastating makes you stupid. So size your risk so a losing streak is annoying, not devastating.
I want you to save this video right now because what I'm about to show you the formula and the live chart examples, you're going to want to come back to this after every session for the next 30 days.
Why nobody told you and now it lands. So, if this is all just math, there's three variables. Basic arithmetic. Why did nobody show you this? That's because complicated sells. You see, the trading industry runs on one business model. Step one, convince you it's complicated. Step two, sell you the solution, and then step three, when it doesn't work, it's your fault. Wrong discipline, wrong mindset, wrong application. Step four, sell you the next solution. And the cycle repeats just forever. I had a trader in our inner circle who I talked to last week. He had spent over $8,000 on courses over the last three years and he's still losing. However, the moment he understood these three variables, probability, risk, and reward, he said it was the first time trading had ever begun to make sense to him. $8,000, 3 years for three variables and basic arithmetic. The simple path is available to everyone and almost nobody takes it. However, don't be confused. The simple arithmetic is not edge alone. You still need a trading system and you still need to follow it.
So, here it is. After 15 years, I'm going to give you three steps and apply to three real trades. So, step number one is you need to find the asymmetry. Before any entry, I ask one question. If I'm wrong, what do I lose? And if I'm right, what do I gain? Is the math going to be in my favor? Generally, I try to keep my minimum at 1:1. And if I can't get 1:1, I'm not going to trade. Not if it feels good, not I'm confident about this one. The math either says yes or the trade doesn't happen. But here's the part most people miss. Finding asymmetry isn't just about drawing a stop and a target. It's about reading the market condition first because a 1.5 or even a 2:1 trade in the wrong condition is still a bad trade.
So, let me show you what I mean on real charts. Setup number one, price discovery continuation. Here's the NQ futures, and this is the morning session. Here's the full read before I even enter anything. First, I look at where price is relative to the value area. And the value area is VWAP plus the deviation bands around it. And that's that shaded region right there. At the open, price pushed up and broke above the upper deviation band. That's outside the value area. Now, did it accept there? Is it spending time there? Is it closing? and moving more distance above the band. Is it building multiple candles outside? Yes. So, just look at these candles. Multiple closes above the upper band. Time and distance outside value. This is acceptance. That tells me one thing immediately. This is not a fade the move kind of day. This is a discovery day. The market is saying higher prices are fair. So, we have setup number one and that's price discovery continuation. And now I wait for the pullback. Price comes back to test the upper deviation band. That's this candle right here. And closes near the band. Wick down. Body holds above. And this is the first sign of strength after the back test. This is my entry signal. Not just because it touched the line because the condition was established first. Acceptance outside value. And then this test of the deviation gave me the entry with defined risk. My entry was here and my stop was just below the back test candle. This is roughly 22 points of risk. And the target, the measured move back towards the prior high. This is roughly 60 points of reward. That's 20 point risk, 60 point reward. This is essentially a 3:1 risk-to-reward. The math says yes, this is continuation. This is setup number one, price discovery continuation, and it's in the book with full annotated charts. And here's how it played out. Notice what I did not do. I did not just trade the band because price touched it. I had to read the condition first. We needed to see acceptance outside of value. Confirmed the setup, then found the entry, and the band was the entry location. The condition was the reason for entry.
Chart number two, we're going to do gold. Setup number two, fade value or extremes. Now, the exact same formula, different instrument, different setup, same three questions. This is gold and this is during the regular session. Here's the read. Price spent the entire morning rotating inside the value area. It's between the upper and lower deviation bands and multiple touches on both sides. We're seeing candles closing inside the range and that is acceptance inside of value. Now, what does that mean? That means we're in a balance day. This is a two-way trade and the market is comfortable between these levels. Institutions are doing business here. or they're doing transactions and really nobody is committed to a directional move. So what do I do in a balance day? I do not try to pick a direction and ride it. I fade the extremes. This is where price tags the upper band. I look for rejection and sell back toward the VWAP. When price tags the lower band, I look for rejection and buy it back towards the VWAP. This is setup number two, the fade value area extremes. Here price pushes up to the upper deviation band. Watch what happens at that level. The candle tags the band. We see a wick above it and the body closes back inside. The very next candle is a red candle and it's moving away from the band. This is a great sign of rejection. My first sign of weakness at the extreme, right? My entry is here and my stop is just above the wick, the rejection candle. This is about 2 and a half points of risk. My target is going to be the VWAP, the session center of gravity. And that's about five points of reward. So 2 and a half point risk, five point reward. This is exactly a 2:1 trade on one contract of gold. That's a $250 risk to make 500. Now, I actually entered this slightly late. I should have been in at this place, but I hesitated and I paid a little lower than what I would have liked. That moved my ratio from 2:1 to closer to 1.7. Still much greater than my minimum threshold. The structure was valid. The condition hasn't changed. So, I took it. And this is an important lesson. A slightly late entry on a valid setup can still be a valid trade. A perfect entry on the wrong condition is not. So, again, this is setup number two. The fade value or extremes. There's an entire chapter of the book dedicated to it. And here's the trade. Notice the difference between setup one and setup number two. Setup number one, acceptance outside of value, where I trade with the direction of the discovery. And setup number two, where I see acceptance inside of value. And this is where I like to fade the extremes back to the VWAP. It's the same math, but a completely different read. The condition is going to decide everything.
Okay, here's YM futures, which is the Dow Jones Industrial Average. This one I'm going to walk you through honestly, including the trade that didn't work because this is real trading. So, here's the read. It's the opening session and price pushed down and spent time accepting below the lower deviation band. Multiple candles outside the lower band on the downside. So, we have time and distance and that is acceptance outside of value but to the downside. Now, what happens when a price discovery move exhausts itself? it tends to come back. Price returns to value and that return is when it breaks back inside the value area. This is setup number three in the system, the return to value trade. Now watch this. Price starts pushing back up toward the lower band. It pokes inside and I'm watching. Does it accept inside? The first attempt here, price breaks back into the value area. I enter on the break. The stop goes just below the lower band right here. So the risk is 30 points and I'm targeting the VWAP which is actually 150 points. This is a 5:1 trade if it actually goes. And here's what happened. I was stopped out and I lost 30 points. Now did I do anything wrong? Let me check the formula. The condition is that acceptance outside value to the downside. Yes. Setup number three, entry a break back into value. Yes. Is risk defined before entering the trade? Yes. So, did I follow the formula? Yes. That was a good trade that lost and not a bad trade. The market tried to return to value and it failed. That happens. The system accounts for it. Now, watch what happens next. Price comes back down, retests the lower band, and this time it holds. Buyers step in stronger. That second break back into value is even more decisive. So it's the same setup again, the same condition, the same setup, an even cleaner entry. So this time I'm risking 30 points and again 150 points of reward. So this is just over a 5:1 trade. I took it because the formula still said yes. That right there is the complete picture. A losing trade, a winning trade, the same setup and the same condition. The same formula applied both times and the loss was not a mistake. The win was not luck. Both were the formula working exactly as designed. One loss at 30 points and the other a win at 150 points. So that nets me plus 120 points on the session from one setup after taking a loss. That is what the math does over time. You do not need to be right on every single trade. You need the wins to be worth more than the losses. And when you read the condition correctly and follow the formula, they will be. The setup number three was the return to value.
Step number two is size to survive. Everyone wants to skip this. I'm telling you right now, don't. So, let me make this real with a number. Let's say we have a $25,000 account. Half a percent per trade. So, that's about $125 at risk. If you lose 20 trades in a row, that's approximately $2,500 lost, and you still have around $22,500. You are still here. The math still has plenty of time to work. Now, if you risk 10% per trade instead, after just four losses, you have lost over a third of your account balance. And after seven losses, you are well below half of your balance. You are now making every decision from desperation and desperation leads to destruction. The rule is not about being cautious. It's about staying live long enough for the math to compound in your favor. Size so a losing streak is annoying, not devastating.
And this brings us to step number three. You need to let the math do its job. Let it work. Before I enter any trade, the stop is set. The target is set. even if not physically, mentally. The entire plan is complete before I ever click the button. Then I enter and I do something most traders genuinely cannot do. They do nothing. I don't watch every tick. I don't move my stop because I'm nervous. I don't exit early because I'm scared of giving back the profit. And here's the mindset that took me years to actually believe. And you just saw it in that DAO example. I don't judge a trade by whether it won or lost. I judge it by whether I followed the formula. So, win or lose. Followed the formula, good trade. If I broke the formula and won the trade, it's still a bad trade because now I've learned the wrong lesson. And I'll repeat it until it cost me dearly. You saw a losing trade and a winning trade on that Dow walkthrough. Both were good trades. Both were the formula. The losing one did not mean the setup was wrong.
I'd like to do a quick pause here. If you're serious about becoming a consistently profitable trader, you want more than just free content. The Dale Inner Circle is where I work directly with traders at a much higher level. This is for traders who want structure, accountability, deeper system training, personalized feedback, and a real plan to improve, not just more random information. So, if that sounds like you, be sure to get on the Inner Circle wait list. Now, spots are limited when I opened it back up and the weight list gets first priority. Be sure to check the link in the description and put your name on it.
And the winning one did not mean that I was smart. The math just worked. That's all.
Why most people won't do this. So, some of you are thinking right now, that's too simple. There must be more. And that reaction is what 15 years of trading education has done to your brain. It's conditioned so you distrust simple. The three reasons most traders never use this even after they understand it is first because it's boring. There is really nothing to show off. And then second, it's going to be patience. You saw that in the Dow trade example. The first attempt failed. Most traders take that loss and move on to something else. They don't wait for the second setup in the same condition. The math works across attempts, not just on the first trade. And then the third is going to be accountability. Strip away the complexity and you are left with yourself. It's going to be your discipline, your ability to follow three rules every single day. And most people would rather blame the strategy or blame the market. The ones who make it, they blame themselves first and they work to fix it. And I'll add a fourth one that nobody talks about. Some days there is not a lot of clean setups. The condition is really not that clear. The value area is really not defined. and you might see a lot of trading out and inside of it. The acceptance or rejection signal is really just not there. These days can be the no trade days or the small trade days and they are part of the system too. The math only works because you deploy it when the setup is actually there, not because you forced a trade when it wasn't.
Here is what I want you to do. 30 days a real commitment. Week one, don't trade. Open your chart every morning. Identify the condition. Is price inside or outside of value? Is it being accepted or is it being rejected? I want you to write it down. That is the entire job for week one. For week two, I want you to paper trade only. When you see a condition that matches one of the four setups that I showed you, I want you to take the paper trade. I want you to log the condition, the setup, the entry, the stop, the target, and the ratio. I don't want you to have anything below a 1:1 risk-to-reward. Week three, I want to see small size with real money. Half of your normal risk percentage and eyes on the process only. I don't want you trading the P&L. Then lastly, week four, you're going to look at the data, not your win rate. I want you to see your average reward on your winners and your average risk on your losers and how many trades you took that violated the 1:1 rule. And ideally, you're seeing a 1.5 or better. This data tells you absolutely everything. I want you to come back to this video after each week. The formula doesn't change. Your ability to read the condition and follow it is what develops. And if you broke the formula and it cost you, you don't have to punish yourself. I just want you to note it. You can reset and go again. The math rewards consistency over a long enough run. It always does.
So, the industry spent years convincing you that this is all very complicated. It sold you complexity because complexity is very profitable for them. Three steps. That's all of it. I want you to find asymmetry, size to survive, and let the math work. You're going to read the condition first, confirm the setup, calculate the ratio, define the risk, enter, do nothing. Guys, that's the entire process. If this changed how you think about even one trade, please subscribe to the channel because everything else I teach is built exactly on this foundation. And if you want the complete VWAP wave system, all four setups with their exact conditions, annotated charts, my daily preparation routine, and my exact rules of engagement for every market condition. The book is linked below. It's a bestseller on Amazon. It covers everything you saw today in full depth. Setup number one, 2, three, and four, which I didn't cover everything today. It covers every condition and many of the nuances. Real trade examples on every setup. And the book comes with a free trial to our live daily trading sessions every morning. Real trades live with a real market, real conditions, all called in real time. That is in the link below. And don't trade feelings. It's time to start trading the math.