Quant Finance Graduate Reveals His $1.5M Prop Firm Strategy

Speaker 1 This is the world's number one youngest quant trader to achieve over $1.5 million in payouts in less than 18 months, placing over 30 trades per day. Speaker 2 Pro firms are a generational wealth builder, so I knew I needed a pro firm specific approach and when I was modeling level 2 order flow with specific take profit, stop loss, I found that my returns were not going to be incredibly high. The reason for that is the pro firms don't want you to make money, so they obviously have to structure their rules in a way where the most common trading approaches is not going to work. So you have to to do something against the norm if you want to stand out and be extremely profitable on prop firms. Speaker 1 Introducing JJ Simon, a quantitative finance graduate who didn't approach prop firms like everyone else. He instead found a mathematical loophole that is completely mechanical, removes all psychology and turns him into a payout machine. In this episode, JJ reveals why he treats the evaluation unfunded phase completely differently, the exact maths he runs before buying a single evaluation, and how taking 30 plus trades a day made going on tilt. Speaker 3 It's almost impossible. What was your thoughts on patterns to see a signature of price to say, okay, we're breaking down? Speaker 2 I don't believe in it too much. I think most of it is artificial. Speaker 3 What does artificial mean? Speaker 2 Like institutions placing huge fake candles that should not be read as like true price action. Speaker 3 Why would they exist? Speaker 2 There's a few different ways to approach this question. So instead of back testing like you're on a live account, back test like you're on a prop firm challenge, see how many times you hit the Max drawdown, see how many times you hit the profit targets. And then when you get to the funded account, you need to change pretty much everything because the evaluation and the funded account, you have to optimize for different things. The evaluation you have to optimize for your chance of hitting the profit targets before hitting the Max loss. And then on funded account, you need to optimize for your expected value, which is basically like your chance of a payout multiplied by how large that payout is. Personally, I trade different strategies on eval and funded just because they're like incredibly different. Speaker 3 I'm very curious to know the process of scaling because if we're sitting on 1.5 a million means you saw multiple 6 figures on evaluations. The first question that someone at the Commons will have is where did you get this hundreds of thousands of dollars from? But probably is you reinvest in payouts. So I want to build a journey from 100 to 1000, from 1000 to 10, from 10 to 100 and from 100 to 1,000,000. Speaker 2 The first one I was thankful to start with. Speaker 1 Hey Tysons, before we jump into today's episode, I want to extend an invite to you to our Titans of Tomorrow inner circle. So as we have the episode today with JJ, something that he's developed is the prop firm math loophole, applying his quantitative finance lens to the Prof firm rules. So what we created with him off camera is the exact formulas he used so that you don't need to learn all the maths. You can actually have the drag and drop plug and play formulas he's used to get the most out of Prof firms. That's going to be one thing of many inside of the Titans of Tomorrow inner Circle, which means every single week you're going to get playbooks and newsletters from not only today's guest, but every guest in the past and every guest upcoming automatically sent to your inbox. And as the name suggests, it's an inner circle, which means you get to tell me exactly the questions you want answered based on the upcoming guest roster that we have. And most importantly, as we travel the world, every tour we do is multi country or at least a dozen states. That means every time we're in your city, we're going to alert you to have an in person meet up. That means we go for a dinner together and talk all about charts, trading and the guests. Or even better for some of you invited to join us behind the scenes on the shoots to even meet the guests that we are interviewing. So click the link below to join the Titans of tomorrow in a circle. Without further ado, let's get into today's episode with JJ. What was it from your degree? Which areas from your degree? Speaker 3 Was specifically relevant, and I guess the goal for this conversation is to help unpack the relevant things and your experiences and successes and convert it to someone that doesn't have the degree that you do. Speaker 2 Yeah, I think the most important thing is math, math and statistics, just because with pro firm trading, they obviously have the rules and everything and you need to model your returns based on the separate rules that they have on different firms and the different challenges and funded accounts, all that stuff. So I really was able to use that very strong background in math and stats in order to create positive expected value in all of my trades based on my win rate, based on my risk to reward everything I knew like exactly which pro firm challenge to trade on, exactly how much to risk, exactly how much to go for it in terms of profit target every single trade just because I was able to optimize around the specific rule set that they gave me. Speaker 3 Oh interesting. So your goal was to actually find an edge in the market and then take that edge to the pro firms. Is rather have an edge or have an approach but really have the edge in the pro firm arena. Speaker 2 Yeah, 100%. I have a strategy that it works on live, but it's not going to be insane returns on live. It's going to be very small positive expected value, and that's because it has an asymmetric risk to reward. Speaker 3 In that case, can we unpack how we build an edge around pro firms? What are that's sort of one of the variables to consider And then I guess we have the rules as another layer of the pro firms and then the decision factor of okay, should I or should I not? So let's build the foundation. Where do you begin when you're trying to build a proffer model? Speaker 2 Yeah. Most important thing obviously is your win rate and risk to reward. So if you're trading one specific strategy, obviously you need to know the risk to reward, you need to know your win rate. And then based on that, there must exist an optimal platform for you to trade on just because they all have different rules. So if you're to simulate it across all of the different platforms with your exact strategy, your exact stats, then one of those rule sets must fit your strategy the best, just plainly speaking. So I think people should try and figure out which platform rules would fit them best. And that would honestly just be through back testing. So instead of back testing like you're on a live account, just finding your equity curve over time, back test like you're on a prop firm challenge. See how many times you hit the Max draw down, see how many times you hit the profit target. And then when you get to the funded account, you need to change pretty much everything because the evaluation and the funded account, you have to optimize for different things. The evaluation, you have to optimize for your chance of hitting the profit target before hitting the Max loss. And then on funded account, you need to optimize for your expected value, which is basically like your chance of a payout multiplied by how large that payout is. So it's two different things. You could even change your risk to reward or change your strategy because personally I trade different strategies on eval and funded just because they're like incredibly different. Speaker 3 Well, let's start off with the eval. So we have the moving parts of risk reward, win rate, trade frequency. Is that important to you? Speaker 2 Not really. There is an optimal way to do it, but it is not. Speaker 3 OK. So actually only started off with these two variables. What about risk per trade? Would that be standardized? Speaker 2 Yeah, you should definitely have a static risk per trade. Speaker 3 OK. And your risk rewarder, your profit target is always fixed. Speaker 2 It is for evaluations. It's fixed. Speaker 3 And and you will not allow runners or partials along the way? No. What is the reason for this? Speaker 2 Leaving runners and partials is probably one of the worst things you can do on prop firms. The reason? Obviously consistency rule. Just in general, on most evaluations you can't make the whole thing in one day. If you could, then it's probably better to leave those runners, but mainly with the trailing drawdown, I don't like to leave runners or close my position early or anything like that because of how the trailing drawdown moves. The just since the trailing drawdown moves up at the end of the day on the futures accounts, then you can obviously. You obviously need to build a strategy around that. Basically like I'm solving for Max drawdown in my equity curve. Speaker 3 OK. And therefore are you, are you thinking drawdown versus profit target as the formula or are you thinking total evaluation fees versus total payouts? And then it's just like a slot machine, you keep rolling the dice and you allow the maths to play out. Speaker 2 Yeah, it's definitely the second one. I look to go for like a 3X return on my evaluation spend. And then when I do well, I get four or five, six times. If I do worse, then I'm going to get like 2.7. Like the downside is extremely capped with pro firms. That's why I do it instead of a live account. But what people should do on the evaluation specifically is realize if you've a $3000 profit target and a $2000 Max loss, that is a 1 to 1.5. So if you automatically change your risk to award to a 1 to 1.5, then you're just going to pass more challenges because of how the trailing draw down works. Speaker 1 Hey Titans, let's take a quick break from the episode to talk about a sponsor and partner of the show that is Ola Prime. Now, a lot of traders have been talking about Ola Prime because they were recently the winner of the Fastest Payouts Proform award in the IFX Expo here in Dubai. Something that you don't see so often is that they are backed by their own brokerage firm Ola Prime Markets, and a few things that I love about Ola Prime is that they have offers for futures, forex and crypto traders. And most importantly, they allow you to trade on over 8 platforms and further, they do a 95% profit splits, basically unheard of, which means whatever profit you make, you keep 95% of it and most importantly because of their award, they're one of the only pro firms that offer a one hour payout through a structured 10.1 hour payout system. Your payouts are practically on demand, which means you can spend more time on the charts trading, withdraw your profits, and go back to the markets. With all these steps, measures, and awards in place, they are truly redefining transparency and trust in the profile space. So if you want to work with a profile that you can trust and a partner of the show, click the link in the description or use the code TOT for Titans of Tomorrow to get the best prices and discounts that I've personally negotiated for you guys, our Titans of Tomorrow audience. With that being said, let's get back into today's episode. Speaker 3 Why? Why would someone lot try and achieve A1 to 10? Why would like? Is it just something that is the math doesn't play out or excuse things against you even though it seems like it's in your favor? Why not go for the highest asymmetrical gain as possible? Speaker 2 Technically if if they're one to 10 was the exact same profitability terms of like expectancy, expected value as my 1 to 1.5, it's going to take them with the consistency rule and then if they lose like 100 win 1000. Realistically, it's going to take them probably 20 trades to eventually hit that because they're going to go up 1000 minus, minus, minus, up 1000, minus, minus minus. They'll be slightly positive in the long run if they have a good strategy, but it's going to take them forever to hit that plus 3000 or they're going to need three in a row, which with one to 10 is like extremely unlikely. So it would take them, I'm just going to guess like a week to a month to pass the eval, whereas I'm doing it I'm passing like 10 evals in a day just by taking so many trades of smaller risk to reward. Speaker 3 How often are you placing the trade? Speaker 2 I trade about 20 different times per day. Speaker 3 20 trades per day. 20 trades, Unique positions or copy traded. Speaker 2 Unique positions. I try not to copy trade. I'll layer trades in like if one's in profit, like a funded accounts in profit. I'll layer in evals in the same direction. Speaker 3 Seems pretty intense. What's what's the methodology behind that? Speaker 2 I honestly just like speed with pro firms. I try to trade in all of my accounts every single day. I've constantly been reminding myself that if I take 20 trades per day, it's the exact same as someone who takes 1 trade a day for a month, and if I'm able to trade 20 times as much with the same edge, I'm going to make 20 times as much in terms of my profit. Speaker 3 Got it. Assumes a few things. Number one is psychological decay and #2 assumes that you can get the same expectancy or more importantly the same premises of wind rate restore, etcetera with a higher trade frequency. And I wonder would it not diminish? What would alpha diminish the more you or the more often you seek it? Speaker 2 Personally, no, because in my experience with prop firms, I'm just using a bias. So I have a high time frame bias of where the price is going to charge in for the next 30 minutes to an hour. So I guess it's not too high time frame, but I look forward 30 minutes to an hour, which direction do I think it's going to go and then just. Speaker 3 Using market structure, yeah. Speaker 2 OK, reversion. We'll get into that later probably. And then I'll just take consecutive trades in a row. So instead of doing like 1 eval all the way for one trade, I'll size up, I'll do 1 eval here, another, another, another. So I'm getting like 5 evaluations in the same direction as taking one trade like someone would do on a live account. Speaker 3 I didn't follow. So if I'm buying at the open, let's say, and it's on eval account number one, the moment that one's in a little bit of profit, then I reenter on the second account as opposed to want to take the first entry on all accounts. Speaker 2 I just don't like copy trading personally. It's really bad for my psychology, might be for others as well. I find if I trade every single account individually, I'm taking 20 trades per day on average. I'm going to win like 98% of my days just because I have 20 trades of a sample size. Like people can get a winning month if they take one trade a day because that's 20 trades. So if I take 20 trades in one day, then I'm going to have a winning day just because I had 20 trades with a slight positive expectancy. Speaker 3 I gotta you squeeze someone's average month or couple months compressed into a singular day. Yeah. What is your win rates accord? Even if you end the day green, what is your Yeah? What's your win rate during the day? Speaker 2 Win rate changes a lot with my strategy. There's a few different ways to approach this question, so risk to reward is obviously the most important one. On prop firms, I'll do the 1 to 1.5 on most of my evaluations. Some of them I'll do 1:00 to 2:00, some of them I'll do 1 to 1. So I have a ton of different risk rewards based on what the market shows me and then funded accounts. Some I'll do 1 to 1, some I'll do 1 to 1.51 to 4, whatever. So I have a ton of different risk rewards. I cycle through all of them and then if I see a 1 to 1.5 in the market, I know I'm going to choose this account because a 1 to 1.5 is best for this account specifically. Speaker 3 OK. So I'm going to read between the lines. You tell me if if I'm on the right track because you mentioned me in reversion which is throwing me off. So I want to I want to get into it. You identify a intraday trend for this. I would assume you use 15 minute or 30 minute market structure. Speaker 2 One minute. Speaker 3 One minute market structure to find a trend for the next 30 minutes. OK. Let's say we're in a bullish scenario. Bullish scenario from the one minute time frame only? Or are you using higher time frames to establish a trend? Speaker 2 Just one minute and I'll look back six hours if needed for a really high time frame bias. But mostly I'm just looking one minute. Market opens, it goes this way. I'm just going to trade back to the open. Speaker 3 If I was looking at a one minute trend and my look back was a couple of hours, there's so much, so much variance in what that could mean because I could be inside of a daily point of interest. So even though it's looking bullish, I'm consuming A bearish POI and then I'm waiting for a rejection. That could be 1 lens, even though it looks the same. Another optically similar scenario would be I'm in no man's land, I'm just approaching APOY. Another one is I'm just broken structure and free falling. So there's so many things that would look optically the same on M1, but you zoom out a bit, it would be totally different. Yeah. How do you factor in for that? Speaker 2 I mean, that's all all a very great point if you were on a live account. Since I'm trading on a prop firm, all I need is a slight edge in a bias in my favor. So I don't care if it's no man's land, I don't care if it's near something point of interest or whatever. All I'm trading is a specific direction. I have a direction based on what I think the fair price of the futures are, and I'll just trade all of my accounts in that direction every time I see an entry. Speaker 3 I see the point. You're not looking for a whole move, you're not looking for a trend, you're looking for a probable pocket. And that probable pocket is just, I need to be accurate for wherever price is going to be in 30 minutes. And therefore with a one to two, up to one to two risk reward, that means your stop loss size is just basically a session low and you're targeting the average session volatility. That's basically the window of that you're playing. Speaker 2 Approximately, yes, I do take static risk and static profit targets like each of my accounts. I know exactly on this account I'm going to risk 1000, go for 2000. This account I'm going to risk 1000, go for 1500, and then maybe here risk 500 go for 2000. Speaker 3 Why is there variance on risk per account? Speaker 2 With the prop firm specific approach just because they have the optimal rule sets. OK got it. Like you can just optimize your exact stop loss and take profit for those rule sets. Speaker 3 Let's get into the the mean reversion side or basically I'm trying to get clarity on your approach so that I can visualize and the viewers can also visualize When you wake up and you you're on the session open and you're about to place 2030 trades for the day. How do you set up your day? How do you begin? Speaker 2 I'll start at 8:30 AM Eastern just because there's usually news there. I'll just get my first trade in just a continuation of the news because I'm betting that news, most of the time it's going to be priced in pretty fairly. So that when news comes out there's a huge candle, I'll just trade a continuation of that candle for my first trade of the day. And then after that I'll take usually like 3 or 4 trades trying to revert that move. So if news came out it was very very bullish then I would trade multiple times probably 3 or 4 evaluations trying to short back to the pre news price because I believe on average the news was forecasted and priced incorrectly. So the increased volatility solely from the fact the news actually was released should not impact the fair price to futures. Speaker 3 You mentioned to me off camera the quants or people in your field don't really believe in chart patterns. So I want to extend that out in terms of what what is the correct lens from your perspective to look at price? What is the best way to visualize and understand what price is? Speaker 2 Honestly, I think it's just use news because we're trading futures of I mean, personally I'm trading futures of, of NASDAQ. So I look at the index and index made-up of stocks and usually the things that are going to change fair price of stocks is news basically like forecasting what's going to happen in the future because of a news release. So I try to use a lot of macro economic factors like that into a very, very small intraday in order to gain a small bias. And then a small bias is like extremely profitable on pro firms if you have good risk management. Speaker 3 Is it only mean you trade? Sorry, does that mean you only trade news days? Speaker 2 I trade every day as well just because I have the same theory as news as I do with session opens. Whenever the session opens, obviously increase in volatility sometimes or most of the time, at least in my opinion, it creates an unfair move. So just because volume came into the market and it moved a specific direction, that shouldn't change the fair underlying price of the stocks that I'm technically trading when I'm doing NASDAQ futures. Speaker 3 When you say fair value of price, it's a relative term. So fair relative to what and over what duration. So are you looking at fair price as an absolute criteria on a day by day basis and then you're using that as a we're overextended or overbought oversold on a daily basis or would you do this on an hourly possession? What is? What is the reference point? Speaker 2 I do it every day. First fair price that I will assume it's just 929 Eastern before the market opens. And then from there, if there's consolidation and then more breakouts, I'll just treat the most recent consolidation as a fair price. Speaker 3 So you you establish the fair price as so and then as we break out, you look for one buy opportunity. When you see that move as exhausted or depleted, then you look for the sell back to the fair price. Exactly. And vice versa if it goes the other way. Yep. Uh huh. So I'm still trying to figure out how would you squeeze 2030 trades into a a single day period. Speaker 2 Yeah. So 8:30 AM gives me the continuation of news and then usually 3 reversions or so on that New York AM, 1 continuation, 3 or 4 reversions, and then from there I'll take a longer trade. Usually going into lunch hour like 11 AM, I'll enter one final trade and it's a much longer trade just cuz I'm trying to play it out. From 11 all the way until 2 at 2:00 PM New York PM session opens, I'll start again, one continuation, 3 to 4 reversions. 6:00 PM session, same thing, one continuation, 3 to 4 reversions and then again one more time. Asian session at 8:00 PM. Speaker 3 Oh, you're trading all the whole day? OK. So this means I'm guessing the most important thing for you, it's not high time frame, it's not trend, it's not points of interest. What is most important is reaction of M1 related to markers in time throughout the day. Yeah. So would you believe there is a road map or a daily cycle that is something repeating and predictable? Speaker 2 Not from session to session OK, but within a session I do believe there are unfair moves and if you are able to revert those unfair moves then you have a positive expectancy on a live account. Speaker 3 So 1 common thing that I see online regarding session mechanics would be you have a build up of sorts. You have a or accumulation, you have a manipulation, then you have expansion and vice versa for bearish. Is that kind of the foundations we're we're speaking about? Speaker 2 I'm personally not too well knowing of the online lingo, but just not too familiar with it in general. I like. I don't know what those terms mean, but I guess that's a better question for you actually. Do you think my strategy is like very similar to those things that you've seen online? Speaker 3 I'm trying to understand exactly how, what are the, what are the mechanics of this session because you're breaking into phases. So I guess each phase has a purpose and an objective. And you got to be, you got to be knowing of when is the phase started. Here's a signal for it. This is the phase happening. Here's the signal and this is phase one completed. Here's the signal. So one of these signals, is it just markers in time or is it certain things you see in price basically say how do you identify coordinates phases throughout the session? Speaker 2 Yeah. So I kind of split it up into two phases. Obviously the first is the opening continuation right at 9:30. So like the minute any session opens, I'm ready to take a continuation. Speaker 3 So the priority on the open or fit this phase one is time. Time is the trigger. Yep, OK. Speaker 2 Yeah. So session opens the first one and then when volume starts dying out, it will usually start to consolidate from there. There's obviously that pack of consolidation. I will trade when it breaks structure back towards the opening price as the second phase. Speaker 3 OK. Consolidation being the typical, we've got a range of a high and a low. You see, you see almost a box or whatever and then you're waiting for the break indicating to you, OK, we're starting to be in revert. Does this need to happen at a window of time? Speaker 2 As long as it's before 11, AMI don't care. Speaker 3 OK. So you've got to see an extended move and then before a certain time you've got to see a a break in price break. And then I know what was your thoughts on patterns to see, to see a signature of price to say, OK, we're breaking down? Speaker 2 I don't believe in it too much. I think most of it is artificial when market makers are balancing their inventory. Speaker 3 What does artificial mean? Is is. Speaker 2 Like institution institutionally like institutions placing huge bulk orders like obviously create huge fake candles that should not be read as like true price action. Speaker 3 Why would they exist? Speaker 2 Institutions usually looking to load up or exit positions in mass and that can create unfair moves as well. Speaker 3 OK. And would they, would they not be considered almost a digital footprint of an institutional intent? For example, if I see a something that I can define as an institutional signature and it showed me a bearish signal and this means, OK, I'm ready to mean revert. And therefore because someone, someone has offloaded or or put on a large position, here's the signature. And therefore if they've if an institution has bought a large amount, then price is likely going to go up. Can you use that as a signal to then act upon? Speaker 2 I personally have not investigated using institutional signals. I think there's definitely some alpha behind it because institutions most of the time are correct since they're making money, but personally I have not explored it. Speaker 3 So what is your signal? It's just a. It's a break of structure, a simple M1 break. Speaker 2 Yeah, I found it's very easy to simplify it into a very mechanical step by step. Either either broke structure, it didn't. I try to take the discretion out of it just because I'm trying to take so many trades. It's easier if I follow very step by step plan for every account. Speaker 3 Cool. So well, consolidation, we got a break of structure. We're in the right time window. The break structures happen now. I guess you would cover the high. What's the execution criteria? Speaker 2 As long as it closes below the structure that it broke, I'm good with entering and then the stop loss. Take profit are static, so I don't really believe too much in putting stop loss above previous high take profit at a specific previous low or whatever. If you want a live account, that's definitely something you should explore more, but on Prof forms it is infinitely better to use static risk in terms of like exactly 1000, exactly 500. Speaker 3 Static risk makes total sense to me because you're playing into the maths of the profile model. What does it make sense to me? Is a stop loss? Is there as an invalidation my idea? It doesn't make sense. So if I'm seeing consolidation and a break back to the mean, okay, now I have a thesis, and that thesis is probably no longer valid if price keeps shooting up. So at some point I've got to say, OK, this idea is aborted. But if you're putting a static stop loss based on the risk reward you want, that stop loss might be placed in an odd place where you could round it up and say, let's cover the high or yeah, it's way past the high. I might as well cover the high. Does that not leave you a little bit like OK, why is the stop loss here? Speaker 2 I don't, I don't read too much into that. I think just because the proper specific approach with the static stop loss is like infinitely more powerful than adjusting it by a few $100 to be in a specific point. Speaker 3 And I I guess be with the background you have, you probably modelled out putting stop losses at technical places where you would protect it and they didn't work out favorable. Speaker 2 No, no, I found infinitely better to have a static stop loss. Speaker 3 How interesting and with your TP is the same thing, you know, having profit targets based on price action. It's just a static level. Speaker 2 Exactly static. I think it's it's better for pro firms just because of how the rules have been structured. Speaker 3 So you have static risk per trade in a dollar amount, you have static stop loss, you have static profit targets and only one of them. What about the break even protocol or trade management along the way? Speaker 2 I never go break even which might be interesting to hear unless there is a new session opening. Like if I'm in a trade at 6:00 PM and then Asian session opens I will go break even or if we have news coming out then I will go break even. But like 95% of my trades I'm not gonna go break even. I find it better to just let it play out in the long run because I'd rather be in the trade than not in the trade, even if it's pretty much random from that point if it's going back to my break even area. Speaker 3 I guess you've modelled out the only reason someone would break even is because I'm in a trade idea of moving towards my target and it has no reason to come back. And I guess you found that it can come back and still go to my profit target more often than just reverse on me? Speaker 2 Yeah, especially if you're mean reverting. Speaker 3 Why is it more likely to reach a target on a mean reversion as opposed to with the trend? Speaker 2 If it goes back to break even, it's mostly in my opinion market makers are balancing inventory so when there's a very strict fast move on a reversion like back to the opening price, it's very common to see retracements because it can't travel so far with only one sided orders. Speaker 3 Uh huh. Are you using level 2, the order flow? Speaker 2 I have never no. Speaker 3 OK. It's a very unique approach you have of struggling to resonate with it or visualize it because it's so different to everyone else that I've spoken to. How did you come up with it? Speaker 2 I tried a lot of the things that you are probably familiar with like order flow, level 2 data and specific profit target stop losses, all on live accounts. I was able to have marginal success. But I realized pro firms are a basically a generational wealth builder at this time in, in, in our lives. So I needed, I knew I needed a pro firm specific approach. And when I was modeling that specific level 2 order flow, my specific trade history and all that sort of stuff with even specific take profit, stop loss, I found that my returns were not going to be incredibly high. And the reason for that is the prop firms don't want you to make money. So they obviously have to structure their their rules in a way where the most common trading approaches like on live accounts is not going to work. So you have to do something, not something against the norm, if you want to stand out and be extremely profitable on prop firms. Speaker 3 It kind of makes sense in a weird way, but it basically means you're not concerned about alpha, you're not concerned about concepts, strategies, technicals, whatever. It's just pure maths and you just need. The only edge you have is when to enter because everything else is static. The break even is static, the risk is static, the profit and stop loss. Everything is static. It's just the moment you enter and it and you just play the math. So which way is it going to go? Take profit and stop loss. Super unique. Would this apply on multiple asset classes or is it only what are you trading specifically? Speaker 2 Futures for NASDAQ. Speaker 3 And have you modeled this on other areas? Speaker 2 Personally, no, just because NASDAQ is the one that has at least the best commissions and the spread for my trading approach. But it would definitely work on prop firms if you had the same strategy in that similar approach. Where are you doing the static risk and profit targets? Speaker 1 For the last two years, a proud sponsor of the show is a top ranked leading prop firm Alpha Capital and for the years that I've been working with them and the thousands and thousands of viewers you guys have been working with them through the discount codes of Titans of tomorrow is clear for me to see why they are top ranked prop firm in the industry. They have also reached a monumental milestone of $100 million in payouts and with the multiple step plans and the multiple package types they have, there's. Speaker 3 Going to be an option catered specifically for what you're looking for. Speaker 1 So, you can buy an evaluation account catered to your needs at the most competitive prices and without discount code TOT for Titans of tomorrow. You are able to get the most unbeatable, unmatched prices in the industry with a leading. Speaker 3 Trusted Platform. And with that being said, let's get back to the episode. What would your quant professors or peers who are now, you know, pH, DS or whatever the case may be working in an institutional environment? What would they think of you and and what you're up to? Speaker 2 I mean, I think they'd call me out. They'd say, why aren't you trading on a live account right now? I think they'd be a little bit confused about how broad firms are so profitable. If you approach them in the right way, they would probably feel like their work on live accounts and stuff for institutions is a lot more meaningful just because they're generating real value. But I personally have found that pro firms are basically zero risk if you're approaching them correctly, and it's like an incredibly profitable way to scale your trading. Speaker 3 Looking back in, in the year and a half, you've made or less than a year, year and a half you've made 1.5 million. So you're running at about 100 KA month consistently for a year and a half. With the benefit of hindsight, in a year plus of progress, looking back, could you have made more or did you optimize it and and fall in the right path? Speaker 2 I followed the right path for about the last six months before was in terms of my proform approach. It wasn't the best my my risk management then even still could have been optimized. I feel like now it can't really be optimized. I feel like I'm at my limit. I'd also probably change the way I approach the proforms a little bit differently and might be more aggressive on some, more conservative on others just because of how they how they treat profitable traders. Speaker 3 OK. I want to understand the the foundation of the formula almost to get to this comment, which is I could have done risk differently or better. What does that mean because you're doing a static or standard risk. So what is? What is the various? What is the considerations to arrive to a decision? Speaker 2 With my specific strategy, I obviously have a specific amount of points in my favor if I'm trading a reversion back to a specific price that I think is the fair price. Now obviously not all of the time I can get there if I have on some accounts a 15 point profit target that I have to take just for the problem specific approach. I would definitely go at it from a more advanced approach now where I want to have my profit target be exactly where I think the fair price is. Plus layer that sort of live account approach in with the static risk approach as well. So that would be like changing contract size from like 2 to like 17 micros. Like very small changes to increase your return. Speaker 3 Which profiles have you found the greatest opportunity? A wealth building opportunity based on the rules and premises that they have. Speaker 2 Top Step, Lucid and Tradify are personally the preference that have paid me out the most and they have very good prices as well. There's obviously smaller firms out there that you could work with as well that do pay you very well. And then unfortunately there is that sector of pro firms that are not going to pay you at all. So it's just important to avoid those. Speaker 3 How do you flag that? How do you know which ones are are sketchy? And I guess you've also had your fair share of denials? Speaker 2 I have I had about 300,000 denied in payouts which is it's quite a lot over the last year and a half and there's no real really no arguing with them. I try my best to post about it online and tell people stay away from them. I guess I've sort of just found the firms that I work with and it's just those firms that I've been working with for like 6 months. Every now and then a new firm pops up like Lucid. Lucid popped up on my feed I think in in September of last year. I feel like I was maybe one of the first people. I bought my first one September 8th I believe with Lucid just to try them out. So what I do when I find a new firm is I try it out one account only and then if they pay me then I'll invest more. Just trying my best to look online, YouTube, see if they have public presence and then stay away from the scams. Speaker 3 As as you said, your professors and peers would call you out. I was thinking, what would they say? And I'm going to try and, and be in their position and, and challenge you, which is a goal of a trainer is to find alpha, which basically means I need to have a positive expectancy. So day-to-day varies doesn't matter, but over time I will make money. And that's through data mining or, you know, finding pockets of dislocation. That's the game. You're playing a completely different game, which seems more analogous to gambling or a casino, where you're just playing the odds and lowering your background in poker probably is where this is birth, where you're kind of not concerned with real life alpha, You're concerned with asymmetrical gain and positive expectancy only in the arena you're playing. So is this kind of like a casino gambling gamification model inspired by that? Speaker 2 It could be, yeah. I think the trading strategy as well has been developed by my background. But I'd ask you, most traders want alpha, but most traders want alpha because they want money. They don't just want alpha, they don't just want to beat the market. At least from the people that I know, they want to make money. So this is an extremely profitable way to make money with little to no risk because it's not prop firms. So that's personally why I do props. But yes, I think there is a gamification. If you're optimally approaching the prop firms, it is kind of hard to do that yourself. You would definitely need math, statistics and and modeling background in order to do so. But if you're able to pair at least semi solid risk management with a decent strategy like meaner version then you would have very positive returns on prop firms. Speaker 3 I want to compare prop firms to the casino because Prof firms have a baked an edge. They make money when the gambler loses money. They just skew things in their favour and that's exactly what the house is, the Prof firm. And then you as the player, the gambler, let's say your job is as a successful gambler would be. You count the cards, you, you play the odds, you play the man, and you find pockets of opportunity until the house says get out. What? What is? What is the approach that you've taken from your poker background into training? Speaker 2 Well, I think the most important thing that I learned from trading with psychology or from poker with psychology, psychology is definitely a very, very strong part of poker. It might be analogous to trading psychology, as in like your poker skill is equal to your trading strategy and then your poker psychology is literally the exact same as your trading psychology. So I feel, I feel like I built a very, very strong base in psychology from poker and I was able to carry that over to trading where I feel like I only tilted once in my entire life trading and then never have since. No way. Speaker 3 Yeah, why? Speaker 2 I think obviously it's playing the odds most of the time. I just know it's gonna work out in my favor because I've been doing it for so long. And and also I just know like how statistically bad it is to tilt just based on like expected value of these proper accounts. It's like I understand exactly how much I'm risking in terms of real dollars and I know that I'm going to trade on. Even if I wanted to tilt, I would trade a different account because the account is worth a lot less. Speaker 3 I feel like every trader low key knows that, but in the end we're not robots, we're human and even if I know in the heat of the moment that's probably not the best decision. This is a FOMO or a Yolo trade. The impulse feels so strong that I can't help myself. Is where most traders find themselves, especially in their first year or two. How have you been able to completely adhere to the plan and and ignore such powerful emotions that we all feel? Speaker 2 I think since I'm allowed to take 20 trades, 20 plus trades per day with the strategy, I feel like I'm always one and done with the trade. I don't care if it lost, I don't care if it won. I'm already looking for the next opportunity. I'm not hung up on on the result of that trade. I'm not even hung up on what it's doing in that trade because I don't really go break even. I'm automatically onto a new prop firm looking at the exact same chart, but just looking for another entry on a new firm. So I feel like I don't even get distracted. I don't have to let the trade play out. I'm just in this and then I'm over here on a separate task. Speaker 3 That is interesting because usually if someone is taking 1 trade a week, then if they place a trade on Monday and there's a loss and they're pissed off, they they've got 5 trading days left to marinate on the idea. Where as you can kind of get to get that impulse or whatever feeling out in the next 30 minutes, which is pretty interesting. Do you think out of all the trading motions that could exist from fear, anger, greed, FOMO, all all of these powerful emotions that are common, do you think confidence in your data Trump's all of it? Speaker 2 It should, but with human psychology, I don't think it's fully possible for that to play out personally. That's how it's been for me. I think just because of my background in quantitative finance and poker, I think those combined have created very, very strong trading psychology to the point where I know the numbers and then from poker I know myself. So I know I'm not going to enter any positions that would be against my favor. Speaker 3 You were a university student when you first bought your first few profit accounts so your net worth was relatively low as most students are. So then if you're floating PNL couple thousand. I remember when I was a student my rent was like $500.00 for the month so if I was floating a grand that's a lot. So I'm more confused on you can be rigid, you can have experience, you can have, you know, a background you can revert back to. But when when you're floating your net worth, whatever the amount is, that's going to be a loud emotion in your head, the thoughts, the what ifs. Or should I lock it in early because I could do XYZ? How did you navigate that in the first month or at least beginning moments? Speaker 2 I think the main thing in terms of like holding positions to expiration as I know it's optimal to do so. So I can just sort of convince myself that I need to do that. But specifically on prop firms, if I'm floating 1000 on a funded, I don't really care if I lose that because I only lose the two or three evaluations I bought to get there. So I really spent like $300 to be floating 1000. So if I lose that 1000 floating and then my $500,000 stop loss, I'm technically only down $300.00. So it doesn't really seem like too much. Even when I started with like 5000 dollars, 300 doesn't seem like too much of that, which it definitely still is. Like people should build a bankroll before starting to trade, but I still would feel pretty comfortable just because the risk and the downside is capped. Speaker 3 I'm very curious to know the process of scaling because if we're sitting on 1.5 million, you have a one to four, it means you saw multiple 6 figures on evaluations. Now the first question that some of the cops will have is where did you get this hundreds of thousands of dollars from? But probably as you reinvested payouts. So I want to, I want to start off with let's, let's build a journey because I'm sure it's throughout the phases, there's pivots you have to make, but I guess it's from 100 to 1000, from 1000 to 10, from 10 to 100 and from 100 to 1,000,000. Let's walk through these chapters and the strategies you would deploy to do it. Speaker 2 Yeah, The first one I was thankful to start with about $20,000 just because that's what I had made in poker and I felt comfortable using that on Trading Capital. But if someone were to start with 100, I would probably recommend them. To not even start with 100, I would recommend at least start with 1000 just because you want your risk of ruin to be a 5% or less. It's just a a pretty good approach for trading in general. So that would mean you want to buy about like 20 accounts or so just so that the statistics statistics will play out in your favor over the course of 20 accounts. Speaker 3 How are you calculating risk of ruin? Speaker 2 Basically when you hit the upside, which is the payout, you have your pass rate which is like 2530% multiplied by your chance of getting the payout. So you can sort of see like if I have 25% chance to pass and then 25% chance to get the payout, multiply those two together, that's your, that's like 6.25% I think. So then is. Speaker 3 This why you keep everything static, Yeah, yeah. Because your payouts is always the same amount that what is. What is your payouts about? Speaker 2 Payouts I try to go for Max payouts of 5000 per payout. Speaker 3 OK. And your likelihood of achieving the payout as well your win rates, what is that number? How do you how do you calculate that? Speaker 2 If I'm starting from eval, it's pass rates multiplied by chance of reaching $10,000 balance because I want to get to a $10,000 balance on my account and then take out 5000 which would be the Max. Speaker 3 What's the look back on, you know chance of passing the eval? Is it the last five latest 5 or is all evals you've done? Speaker 2 Personally, it's all of the evals that I've done. 5 is probably not enough. I would recommend at least 50 in order to have like an exact number, but you can have a a pretty good approximation for like 20. Speaker 3 OK, and I'm following that formula. Now that I've put in my own numbers and I've got the maths and I know my risk of ruin is X. How do I use that number? Speaker 2 You can use your your bankroll like determine exactly what bankroll size you need to start trading and then exactly which program accounts to buy. Because you know if like you have a 5% chance of getting a payout, which is probably on the lower side, even 95% chance of failing. And you can do like 0.95 to the power of maybe like 20 if you're going to buy 20 accounts and then you'll know my chance of getting 0 payouts from 20 accounts is that number and you? Speaker 3 Want that. Yeah, you just, I mean, it's going to be large numbers, going to be a lot of accounts. But then in that worst case scenario, 5% chance of a payout, you're always guaranteed to get a payout and reached. Yeah. So you're literally just playing the maths. What do the numbers look like for you? Speaker 2 It is. It is kind of hard to give an exact number just because I'm on so many firms and they all have different rules. I try to pass about 30% of the evaluations and then payout rate. I also aim for it to be about 30%. Speaker 3 And would you say that's something that's very dialed in and it's taken time and effort to master, or is this something a lot of people could achieve it? Speaker 2 Definitely takes a lot of time to create a strategy that works to create a like a life approach that works to finding this many trades in a day as well as statistics and modeling your risk of ruin modeling like your bankroll which Prof firms you should trade with. But I think it is possible if someone is is really dialed in and specifically taking this sort of approach, it's possible I. Speaker 3 Finally, have a special offer to share with all of you from the US or My Futures Traders, which is over 20% of the listeners of the show and that is Alpha Futures a leading. Speaker 1 Futures Prof firm that is working with trade of eight and Ninja trader that are compliance with CME regulations. With the largest end of day balance drawdown in the industry and 90% profit split and same day payout and with the most competitive pricing in the industry with accounts starting at just $79. On top of that, just by being a viewer of the show you can and up to 40% off. Speaker 3 All evaluations, so why not get started with an evaluation right away trading 50,000 a $100,000 and you already know the power of pro firms and larger capital. So go ahead and use the link in the description or code TOT for the best prices in the industry plus the best discounts in the industry to make this a home run offer. If you are a futures trader there, there's a concept that I play around with in my head, which is called the revolving door strategy, which is let's say I got $1,000,000 of capital and it's split up into 1000 K accounts. But now I could copy trade all my trades on all 10 accounts. And then if I have a good period, wow, I've got a lot of payouts in one go. If I have a bad period, I blow all of my capital in one. So therefore, I, I mean, I used AI, so I wonder how your calculator or the mass, we'll get into that. But then I just modelled it and said based on these variables, KPIs of Winrar risk or what XYZI just said, how often should I space these out or should I trade them all independently? And in my specific case, it was of these 10 accounts, trade everything one week apart on a four week cycle and a one week off. And when you reach your payout, turn that account offline until the next cycle. And then when I modeled it out, even I put in a losing equity curve where the expectancy was minus you lose 30% across 100 trades and modeled out even that losing strategy, losing trader made A12K payout that was OK. So this is all just maths. Have you used AI to do all of this? Speaker 2 No, I think I created the strategy a while back when AI wasn't that intelligent. I still talk to it a bit about trading and and modeling and that sort of stuff. It does have some problems. Obviously it it can't account for psychology of of the trader themselves, but it can let you out a very solid road map. Speaker 3 What about just the logistics side of things, You know, all the different rules and intricacies and even just managing, OK, I've got these accounts, this power pending just for tracking purposes. How are you doing it? Speaker 2 I just have an Excel spreadsheet, the same, yeah, same spreadsheet for like 16 months now. So I've got it down. Whenever I buy an eval just goes in the spreadsheet if I want it. If I lost it, that's also noted, the date, the price, then the funded account. If I got a payout, how much was the payout? And I can just track all of my statistics in one. Speaker 3 So I think I'm in the in the lucky unfortunate position that I've spoken to every trader on earth that's made $1,000,000 in payouts at least, and usually in fact all of them. The story has been from that million or whatever, multiple millions in payouts, there's usually one huge payout of like 70% of the total amount. It was 1 moment, one winning period. And you know, of course, hats off to all of them. But then that can also just be All Stars aligned. But I guess with your approach, there hasn't been a huge block moment. It's just base hits for a year and a half. Speaker 2 Exactly. Yeah, I feel like there was a golden age of Apex when Apex would payout 1,000,000 dollars, $2,000,000 to a trader, and then that's obviously very profitable. I'm not sure how Apex was existing as a company back then, but yeah, some people hit huge wins and they sort of die out because they got like extremely lucky with increased volatility. Like there was the silver thing that happened with Top Step. Top Step had to ban silver and increase their prices just because of how exploitable trading silver was. So definitely you can get lucky and get huge payouts, but I find consistency is a lot more important because I want to be doing this long term. My biggest payout has been 45,000 and then every other payout from that then on is literally 5000 or less. Speaker 3 Yes, it's crazy. Your biggest payout is only 5%, less than 5% of your total earnings, which is totally uncommon for any profit trader I think what what is the key to the consistency? Is it just it's in the maths, there's no hiding. Speaker 2 Yeah, it is because you know, maths going to play out in your favor in the long run and then just take as many trades as I possibly can with a slight edge and then it's going to pay me. Speaker 3 Is the new variables coming in, in terms of the model is shifting, the prices are adjusting, the rules are adjusting, and can you extrapolate past performance to, you know, the next year and a half or when do you see the timeline before it starts to decay? Speaker 2 I can sort of extrapolate what I currently have at a pretty good rate. The only problem is the live accounts on the prop firms. They're obviously getting more and more strict because they want to try their best to limit the profitable traders. So that is sort of the only problem that I've ever encountered with this approach is just the live accounts that they give and there's not really any way to forecast how they'll change the rules. But pricing is not really too big of an issue. Speaker 3 OK, I've got a question. So I I have a medical background. I did six years at university and like yourself I completed it. But during my degree is when I came across training. So by the time I graduated, just like yourself, I went all in. My opportunity cost of what I would earn as a dentist, which my classmates are early, is between 5:00 and $15,000 a month. You start off at the five and you work your way up and $50,000 a month is a nice plateau unless you do a masters at XYZ. So my opportunity cost was basically, if I'm not making six figures from the path that I've chosen, then I might as well have done that minus a bit of fulfilment and XYZ. Your opportunity cost with the background you have is not the same. So I want to understand, first of all, what does your career lead to if you had stayed on the traditional path that you were on? Speaker 2 Yeah, Most likely quant trading for a very large institution, they pay very, very well even for entry levels like 3 to $500,000 a year. And then from there, you can obviously level up to 1-2 million a year in a few years and then maybe 10 years up to 510,000,000. So it was definitely a very unconventional path for me to pivot away from that. Speaker 3 Year. So the, the I'm a little bit older than you. I've just hit 30. So I can imagine if you stayed on the path you were on by the time you're my age, it wouldn't be weird that you're earning multi 7 figures, even 8 figures a year. So now the path that you're on, you had a phenomenal year. How do you consider your opportunity cost, opportunity cost moving forward knowing that by the age of 30 or mid 30s you're going to be sitting on a probably an 8 figure net worth. Now that is no longer your path. What? What are you going to do instead? Speaker 2 I would probably plan to open my own hedge funds. I never really envisioned myself working long term for someone else, and that's sort of why I pivoted away from the the traditional 9:00 to 5:00, which had a hedge fund could be extremely stressful and probably even more hours than than a nine to five, even though it does pay well. I just couldn't find myself working like that for that many years in a row. I'd always want to do stuff on my own time and then get paid exactly how well I do. But then in the future, yeah, I'd like to open up my own business in terms of a hedge fund. Interesting. Speaker 3 Do you think your age in the pro firm environments and just trading in general is a help or hindrance? Speaker 2 In terms of prop firms, that's probably helpful. I guess there's not really like, I don't know if there's a specific age group that does better at pro firm trading in general, but I feel like there's a pretty common pipeline from like gaming, at least from the people I know gaming into trading. So lots of people that I know that are really profitable traders, we're very good competitive gamers back in like a few years ago and it's sort of like a a pipeline that I've definitely seen. Speaker 3 The the reason I mentioned this is because I have three brothers. One of them is 19, you just done 19. The other one is 28. So a big age gap between them and they both started a business independently. And I'm comparing the two and my youngest brother, he's just got this delusional, optimistic and never say no, go get a mindset. And my other brother has just been weathered by life and therefore all the questions come in of like what if and but I've got these burdens and responsibilities and just the freedom and flexibility that someone as a university student has is unmatchable and usually pairs nicely towards taking an adventurous route. Is this something that even comes to your mind or is just this is how it's worked out? Speaker 2 Honestly, it's just how it's worked out. But I definitely feel like people my age and even younger can take a lot more risks. They have a lot more time to build up a, a stable sort of income or like a stable life. And you can take more risks in terms of your investments. You can take more risks in terms of your career path. And I feel like that's sort of where that's why I'm here now. Speaker 3 What have you done with all the payouts? 1.5 million cash. Speaker 2 Yeah, honestly most of it is investing right now, so I'm just holding long term investments. Obviously I don't know how long proper trading is going to be a thing, so I want to pretty much save as much as I can. I just upgraded my life in very small aspects like a new apartment and then a nice computer setup, like upgrading my life in terms of trading so I can trade just a little bit better so I can make more money. But honestly, most of it is just going long term investments so that I can prepare for my future. Speaker 3 I have to commend you on that because if I was your age and had that much cash in my account, most would do stupid things. So that's very responsible of you. I'm curious now to know with your successes, run what what? Because I I assume you have your eyes on the Internet like most traders do. What do you see that most traders are doing wrong, especially in your age demographic? Speaker 2 Honestly I'd say copy trading. It's I I'm personally it might be a a pretty strong opinion, but I think copy trading is one of the worst things you can do ever while trading. Speaker 3 Copy trading, meaning taking 10 accounts and placing all trades on 10. Speaker 2 Yeah, all at once. Speaker 3 Explain to me through maths why it doesn't make sense. Speaker 2 So the first reason obviously is variance. If you're going to take 10 accounts at a time, you're going to risk $1000. That's $10,000. So you would need probably at least $2,000,000 net worth to do that. And I don't think people that are risking $1000 per account have $2,000,000. Maybe on pro firms you can reduce that 2,000,000 down to like 500500K. But just variance in general is a very, very strong reason why. And then? Speaker 3 Just to jump in, how did you determine your net worth should be 500 K to 2 million? Speaker 2 I try and just do like 5%. It's a very quick calculation, 110K200K and then even more honestly, like sometimes you can multiply it by 10 just for like an extremely safe 0.5% risk of ruin. I started with a 5% risk of ruin, now it's 0.5%. But the copy trading very bad, very bad for variance. And then variance obviously leads to tilt like 100%. Even for myself, if I was to copy lose a bunch of accounts, I would get really tilted. But then the second reason is the risk management. If you're copy trading, then you're probably going to risk like 100 and go for 2:50 with 10 accounts. So that's -1000 + 2500. Now those very small risk parameters are going to take absolutely forever to pass an account. And if you ever qualify for a payout, it's going to be the smallest payout ever or it's going to take you like 50 days. So why not just do a -1000 + 2500 trade the exact same risk but one account at a time in order to pass it like 10 times faster and then get a 10 times larger payout for the exact same risk and the exact same strategy? Speaker 3 What is your belief on let's say I am shooting a ball into a basketball net and I get four in a row. And let's say just my odds based on my form and my skill and my everything, it's a 5050 chance that I get it in. But now I've got four in a row. How would you determine the odds of me getting the next one in factoring in just the probability that that my that my skill set has, but then also factoring in form of like I'm on, I'm on a hot streak versus overconfidence. Obviously, I'm going to connect it back to training, but I'm just curious on your on your broad thoughts on it. Speaker 2 I'd give you like a 5355% chance to make that next shot just over the course of your shooting history, it's 50%. So I'm obviously not going to go below 50%. And then for the hot streak, I would just add a little bit of expected value in your chance of making that. But trading, I feel like it's a little bit different than that. Speaker 3 Exactly. I want to ask the opposite question, which is I got four, I missed four in a row. What's the odds look like of the next shot going in? Speaker 2 Next one going in I would probably say 4647. So OK, as much as the the good side was. Speaker 3 Slight variance, right? The reason I asked this is because let's say I've got a 50% win rate in the markets now and I had a 7 lost streak and with a 50% win rate, A7 lost streak is pretty abnormal right? The the math wouldn't show that happens often in a large sample size. So if that has happened, and then usually the decision is let me size down because my psychology's taking a hit and I'm going through a rough patch and my strategy's gone, my alpha's decayed. You know, there's all these doubts that come in. So usually people size down, which I want to hear your thoughts on because you have two outcomes. You either size the same and you go on tilt because of the psychology burden of seeing the large numbers, or you size down. But then the time it takes to recuperate is now extended because you size down and therefore being in the hole for a longer duration is also psychological weights. So using maths with a touch of psychology, what is the optimal decision to be making here? And the reason I'm asking this is because I came across the table, and I'm not sure if you're familiar, which was basically the chance of consecutive losses in 100 trade sample size based on your win rates. Have you seen this table? Yeah, Yeah, I'm actually going to pull it up and we probably throw it on screen too because I think it's just a cool mental exercise. So I'm going to pass it over to you in a second. But just to read it out a bit, let's say I've got a 60% win rates, the chances of me having 7 losses in a row out of at a 60% win rate is 17%. OK. But then the interesting one for me is if I've got a 40% win rate, the chance of me having five losses in a row is 98%. It's going to happen. So with this in mind and then form a psychology in mind, how would you navigate losses and a losing period regarding the static risk philosophy that you have? Speaker 2 I would keep my risk the exact same and I would not change change the strategy. The reason for that is if we're on prop firms, obviously you can have a different strategy because different strategies have different Max drawdown periods just based on how they're built and their risk to reward as well. So first of all, if your numbers play on your favor, there's no way you should ever change your risk or your strategy until you realize the numbers are not in your favor. But I would keep it the same just so that I would not have to worry myself with is anything about me and the strategy changing and I would let the numbers play out. Speaker 3 OK, the, the, the inference that I want to get corrected or if it's right or wrong. Let's say I've got a 40% win rate and I'm sitting on my 9th loss in a row. That's terrible. There's a 35% chance of that. The chance that, that, that, that that ninth loss turns into tenth loss is only 22%. So how would I read that that I have a 40 or 45% win rate or I have 80% win rates because the chance of a next loss is only 22%? Speaker 2 Hold on, let me check that. Speaker 3 I, I want to, I want to run it by you because I didn't know what was correct. Do I look at the independence? Basically, does string of losses have a memory? Because I have a 40% win rate, so the next rate should be a 40% win rate. But the math is showing me 9 to 10 is not 40, it's 80. Speaker 2 Right, you would use the multiplier between those two. So your chance exponentially of getting 9 versus 10 in a row is 9 * 0.4 or 0.6 people. OK, so each trade is memory less, which means if I was to lose 9 in a row with a 40% win rate, my next chance for a trade is still the same 40%. To go from 9 to 10, you would essentially multiply that value at that percentage at the ninth loss by 0.6, which is your chance of losing. So it's essentially making the probability even smaller. So it's going to decrease your percentage by whatever 818%, but the difference between those two percentages is just in terms of the whole, like how likely it is out of a whole, not for the individual trade. Speaker 3 Yes, yeah. I think the key part is this is data based on 100 trade sample size, not A1 trade sample size. That becomes a consideration. Very interesting. Is there any, is there any cool things? Because this is one thing that has come across my feet over the years. There's any cool things that you've learned, or tables or stats or things that you've seen from your quant background that would be cool for a trader to be aware of? Speaker 2 It's a hard one. Speaker 3 No worries, if nothing comes to mind, we can we can skip over it. But I'm just thinking if there's any analogies, there's any, you know, stories or there's any quirky calculations that people go, oh, that's pretty weird. I didn't expect that. Speaker 2 There probably are, but they're not coming to top of mind right now. Speaker 3 Again, another thing that I want to throw at you then is the idea of loss aversion. And and just to put it simply, is people think if a flip of a coin, if I win 100, lose 100 and I went to strangers on the street that people take that bets. But most people would say no. And then if you screw the odds and say I lose 100, but you stranger on the street make 150, people still say no because they're just thinking about the losing 100. And when people start to say yes, it's usually around, I would give them 250 as a stranger on the street if they would. And if I lose, they pay me. Sorry. If I win, they pay me 100. So me to say the multiple or risk reward is 1 to 2.5. So they are willing to forgo a potential loss of 100 if they could see a perceived upside of 250. So for me, the inference for that is loss aversion means even if I recuperate my account, I go through a losing period and recuperate. So financially and break even mentally because of loss aversion, I'm still in a deficit. How are you accounting for this? Because I don't want to say you're just acting like a robot, but there's got to be something that I'm missing here on how you can act so stoically and robotically towards your system and overcome all the lower emotions. Speaker 2 Yeah, I think the interesting thing for people to hear is that those people on the street that you go up to, it's actually the correct decision for them to say no. Even if you're giving them 1:50 to your 100, even if you're giving them good odds based on their bankroll, it could be a very good decision for them to say no. For example, if they only had $100, then their potential downside to losing that $100 is basically nothing compared like it's or I guess the upside is basically nothing compared to the downside of losing everything that they have. So that's sort of based on the Kelly criterion, which is a mathematical way to solve for the optimal bet size in a rigid game where you have like you know your win race and you know your risk reward. So there must exist an optimal bet size based on the reward that you're getting paid out and how much money you have to bet or play this game. So I did take that approach when I started trading and basically it told me exactly how many evals I could afford with my specific bankroll. So if I go in with 5000, then based on the return that I expect to get, I would bet this specific amount like by this eval because it costs 50, this one because it costs 80, this one costs 100. Basically just trying to give me a good enough amount of accounts where my risk of ruin is significantly low and I can realize my expected value over time. Speaker 3 I'm glad you mentioned the Kelly criteria. Are you considering it in any way? Because you're doing static risk and usually the carry criteria it tells you to do a lot higher risk than most comfortable with. I wonder how you navigate that. Speaker 2 I used to use it a lot just because that was how I would build up my scaling program. Now I don't really need it just because I sort of not, not infinite bankroll, but I'm not going to go broke by buying evals just because it's obviously a lot of evals that I could buy and the edge is 100% going to play out. Basically, it's guaranteed in the long run. If it's 215 eval, I'm spending $1,000,000. Like there's zero chance of losing all of that, but when you're just starting out, then the risk might be a lot higher than people think. You can obviously do quarter or half Kelly where you're like a little bit less aggressive than it would recommend you and that's totally fine as well just to build up a bankroll. Speaker 3 Very interesting, I actually forgot to ask as we were talking about the phases of scaling. You started off with 20K. Did you go all in? You bought 20K all at once and then trade them independently? Or, considering your risk of ruin, how did you start off? Speaker 2 I started with 5000, I felt like 5000 and I'm going to trade the 50K accounts. It's about $100 each. So I can afford 50 and then my risk of ruin with like a 90% ninety 90% chance of failing, meaning no payout to 0.9 to power 50 and it's like less than 1%. So I was very comfortable with with $5000 and I turned 5000 into 17,000 trading the 50K accounts. Speaker 3 OK, pause there for a SEC. So the 5000 with the maths you have of expectancy to pass an evaluation, the payout talk XYZ, all of those variables, theoretically how much should you have made? Speaker 2 How much should I have made for 5000? Speaker 3 And and did you with the 17,000, is that ballpark where you need it to be or were you undershooting, overshooting? Speaker 2 I think it was the perfect actually. It's like 3.3 point 4X. So it's like exactly what I was shooting for. I was shooting for three, shooting for 3:00 to 4:00, and then it fell right in the middle. So just exactly as expected. Speaker 3 OK, Now you're sitting on 17,000 in payouts minus the 5000 you're buying. So yeah, you're walking away with just over 10 with that 10, which is basically whatever was gone through the first cycle, whatever the payout number is. In your case it was 12. What do you do here? Do you go all in back again or do you pay yourself a bit and go all in with the rest? Speaker 2 There's two options and it sort of depends on how you would go all in. There's a bunch of different ways you could go all in. Personally, I was faced with two decisions. The first one is I turned 5 into 17 in about a month trading on 2 prop firms. Approach #1 would be to do a 10K to 34K approach with four prop firms. So double the firms, double the investment, same amount of time. Second approach is jump into the 150K accounts with that $10,000 or whatever. And I'm very grateful that I did the 50K approach on 4 firms. Speaker 3 Why? Speaker 2 Because you need to treat from accounts like a portfolio if you're looking to make incredibly large amounts of money in the long run. So treating like a portfolio means you have a bunch of accounts at once. If I was to trade 5150 KS at a time, I'd obviously be a lot more focused. I might get better returns, but it's probably not going to give me anywhere near $100,000 a month. 5 accounts probably gonna be like $5000 a month. Speaker 3 You're clearly a very intelligent person and I'm curious to know, do you think intelligence plays a part in trading or can this be a system that practically anyone that would put in time and effort could replicate? Speaker 2 I think intelligence and trading is is half of its psychology. Obviously I feel like I know just in my in my own head, based on my experiences that it's just so bad that I would never do that. So I think the smarter you are, the easier it is to avoid that. But with trading specifically, the smarter you are, the easier it is to develop a strategy and approach. But I feel like it is an approach that many could follow if it was explained step by step. Speaker 3 And that that's very empowering for many to here, I'm sure. And where do you feel like the threshold is before you start to get diminishing returns in terms of how much capital to hold? Because at this point you've got the bankroll to buy all the profilms and and float millions if you wanted to. What's the sweet spot at this stage? So people will start to see what's the end goal or what am I striving towards. Speaker 2 Right now I'm trying to make about $100,000 a month. It's a very obviously very nice round Number, but it's interesting that it fell exactly on a round Number. Like I was at 75 K for a few months. I was wondering, can I ever hit 100K in profit? Because I can hit 100K in payouts, but can I ever hit 100K in profit? And then eventually I did, and then I stuck with it. Speaker 3 So just to do the last 100K in profit means you need to have 50K ads spend on one 50K in payouts roughly. Speaker 2 50K and what? Speaker 3 In in sort of odd spend in eval spend to get 150K payouts and then the net is in your pocket, which is 100K. OK, what does it take to do that? Speaker 2 It takes a lot personally I'm trading on 10 firms right now, all 150K accounts, trying to have all 5 funded active at once on all of the firms. So it does take about it does take a lot of spend. That's the 3X from 50 to 150. I try to go for a 4X so I can spend a little bit less. Speaker 3 Okay. And what was the reason you were struggling to break the 75 threshold? Was it just a capital total capital funded accounts that you had? Speaker 2 Yeah, honestly, I think I wasn't being as aggressive as I should have been. I was probably trading on 7 firms at a time so honestly you can just always add more firms which adds more accounts but then with 15 more accounts you got to find like 15 more trades in a day or start copy trading. Speaker 1 I've spoken to a variety of guests on the show and a unanimous common denominator between all of them is the emphasis they put on data and actually knowing the inner workings and the insights of your edge and your performance. That's why I'm proud to bring a partner of the show, Trade Zealer, the number one journaling, back testing and all in one insights experience created by traders for traders. What Trade Zealer really gives you is deep insights about your trading that would order not be visible, whether it's through understanding your trade types and playbooks or even insights powered by artificial intelligence through Zella AI. Whether you trade forex, futures, cryptos, the stock market, it all seamlessly connects to trade Zella, so there is no additional work. You've seen me reference it dozens of times and all of the benefits I've had in my trading from the insights I found from my trade Zella. So join myself and thousands of other viewers of the show, you'll get the best discount. Speaker 3 Using the link in the description or code TOT. Speaker 1 For Titans of tomorrow. Speaker 3 You know, what I really like from this conversation is if someone has this ambition of I want to to make 100K payouts this year, they'll be like, OK, I can do that. Let me just start off and buy a couple of 50K accounts. But if you run the bus, it'll probably be very, very unlikely with that amount of capital or the edge you would need would need to be spectacular to achieve it. So if I want to make 100K, forget in a monthly basis, but let's do it in your case, if you want to make 100K next month, let's start off with what's the KPIs. Starting off with the total funded assets under management would be required for that to be a reasonable outcome. Speaker 2 Right. So for me or you? Speaker 3 In your case with the model that you have. Speaker 2 Right. We can go over like 50K, spend 150K in payouts because that's sort of like it's a less return, but you need like a slightly worse strategy than mine. The strategy basically just adds like a little bit more return like from a 3X return to like a 3.23 point 3. So that's just why I have that specifically. But if you have like just a very decent strategy in general, like not not the best, then 150K in terms of payouts. I try to get 5K per payout. So I'll bring my account to 10K, take out half, back to 10K, take out half, and just keep doing that. SO150K divided by 5 is going to give you 30 payouts technically. Like that's basically like 1 payout a day for the month for $5000. And it's definitely not the hardest thing to do if you're running 40 accounts at a time. So you could even run 30 accounts. You would just have to keep refreshing them if they lose. And then just try to get one payout from each account over the course of a month if it loses. If you lose your account, buy another eval, pass it, reach 10K, that sort of that sort of approach. Speaker 3 So what's the math there? If I wanted to run this, how much would I need in total funding allocations? Speaker 2 Allocations it would be 30 accounts at 150 K so is that 4.5 million? Speaker 3 OK, it's a lot of, it's a lot. OK, well that's kind of like an ID or 100 KA month. There's a huge, huge milestone. What would the mass look like for 10 KA month then It would just be 450K in allocation running the same maths. Speaker 2 Yeah, 10K is a lot more achievable. I personally model it. When I first started, it was 33% pass rate and then a 33% chance to get a payout for $2000. That was very achievable for me and my specific scaling ideas and like my approach, my risk and all that sort of stuff. So I do 0.33 * 0.33. So it's basically one out of nine evals that I buy. I'm going to get $2000 out of it. Each eval cost me, I guess we'll say $100 on the upside. So I'm spending 900 and then I'm withdrawing 2000. So with those statistics you can have an easy 2X return, plus you still have $2000.00 left in your funded account because you only took out half. From there you could either grow it back up to 4K to take the Max payout of 2K, or you could just do some winning days and then take out 1000 because you had 2000. So both of both approaches work. It's the same expected value for both approaches just because of how recursion works for funded account values. So both of them would be an option, but I would aim to have one out of nine evals win. I mean, sorry, one out of nine eval purchases results in a payout for $2000, and then you just need to do that 10 times at the absolute worst. Speaker 3 I think what we should do, what I will do is I want to take the transcript of this conversation because you basically give me the building blocks to build a formula which then I can create into AI Dashboard and a tool which is basically everyone can input their own details of their chance of passing an eval. What's their goal per month they want to make? It will tell them all the KPIs they need to achieve. And then it's just a reality check for anyone. If my goal is this, does my reality sit with it? And if not, OK, I've got to work on it. And then people can see directly, OK, I can do this. Then I just need to get to the funding and I think I've got all the building blocks. But if you can, if it comes to your mind, what would be all the variables? Because then some variables people might not know their password for an eval. So I can also give guardrails of what is exceptional, what is terrible and what is average. But what would be these moving parts to get a nice formula for us that people can put it almost in a dashboard and calculator of like I want to achieve 10 KM of this is what you need. Speaker 2 Yep. So the first one is an evaluation cost, OK, just from whatever prop form it is evaluation pass rates, yes. So that's the whole eval phase, that's all you need for the eval phase. Funded phase gets a little bit more confusing. The first variable that I like to research is what I call average cost to funding and. Speaker 3 So just so the first one of the eval side, would time be a factor how long it takes to? Speaker 2 Pass right, It would. That's a good point. So. Speaker 3 There would be 3 here and then on the funded side. Sorry. Speaker 2 The average cost to funded is a term that I might have heard online or I might have made it up. But if I buy 3 evals and I pass one, they cost me $300 to get the funded. So I have a $300 average cost to funded. Speaker 3 OK. So, yeah, so it's taking your pass rate on evals time, the average cost to get your cost to funded on average, OK. Speaker 2 Now from funded you wanna know your chance of getting a payout and then how large that payout would be to solve for your expected value. Speaker 3 And then once again, bringing in time into this. Yep. OK, that's pretty. That's a pretty simple formula. And that that would get us a rate of what, what would be the end of this formula? What? What? What answer did we get? Speaker 2 We have the chance of a payout times how large the payout is for the upside. Speaker 3 OK, yes. Speaker 2 And then the downside is your average cost of funded? Speaker 3 OK. Then that becomes a very simple ratio And then how would I determine what's the effect or yeah, effective amount of funding I need to achieve a payout rate of 10 KA month utilizing these two numbers we've achieved? Speaker 2 1st, just look at the return. So if you, if your average cost is 300, we'll say 333 average cost for a funded and then average payout expected value is 1000. So 3X return very, very achievable. Just look on the the upside you need to make about like 14,000 in payouts and then with that 3X take a third of that. Speaker 3 OK. That'll be your total cost. And then from that you just multiply it and say, OK, that's the funding you would get. I mean, that's very easy. I think I'm going to build that. We'll leave it in the description because I think that's a cool way for people to get a, a dose of reality. And then lastly, I, I, I want to know strategies wise, a lot of people feel like the Holy Grail in trading to get a positive expectancy is in the system, is in the strategy. And I think you've completed real Wired through this conversation for people to realise, sure, it's that, but it's also way more important to have the proper maths in order. But I want to know, are you spending time dialing in your edge or is there something that's kind of fixed and you're just going to keep playing the game? Or is it always an advantage to trying to find opportunities and refinements in your alpha itself? Speaker 2 There's technically always an opportunity to make a strategy better just through more data being collected. Personally, I just do little changes month to month based on sort of the regime that the market's in. Obviously recently have a war. We have extremely trendy, all time high markets. Sometimes we have choppy markets. So I'll change the approach a little bit based on the regime. But if you're on a live account, that's 100%, the only thing you should ever be doing is making your strategy better. If you're on prop firms, it's not really going to add too much expectancy. It's probably the difference between 3.2 and 3.3 X return on my investment. So an extra 0.1% on $150,000 is is like 15. Speaker 3 You're very unique, man. I don't want to thank you for your time and sharing unique insights and joining us on the show today. There we. Speaker 2 Go. I appreciate having me. Speaker 3 There we go. Speaker 2 Good one. Speaker 3 Nice episode bro.