CU LESSON 6 : The Magic potion

CRT
907 views • December 19, 2025
0:01 All right, folks. Welcome to lesson six,
0:03 the magic potion. Now, one of the core
0:06 concepts you have to train yourself to
0:10 get used to in trading is slow growth.
0:14 Slow but consistent growth,
0:21 right? Uh not sudden impulsive
0:24 exponential growth. And that will happen
0:27 uh
0:29 if you focus on growing slowly but
0:31 surely for a long period of time, then
0:33 that's going to become your norm. Your
0:35 norm is going to become you growing
0:37 slowly.
0:40 And eventually, and this is going to
0:41 happen to every single one of you who
0:43 sticks around long enough, eventually
0:45 you will have an explosive month or year
0:50 or even trade which completely changes
0:53 your life.
0:55 But uh along the way and all the way up
1:00 until that moment of exponential growth,
1:04 you've already been growing slowly but
1:07 consistently. And that is the magic of
1:09 compound interest.
1:14 Right?
1:16 So again, if you find yourself to be an
1:18 a hasty, impulsive kind of person, then
1:21 you're going to have to go and train
1:22 yourself to not be a hasty, impulsive
1:25 person, you're going to have to train
1:27 yourself to be
1:29 to change the way you are. And that's a
1:31 very difficult part for most people is
1:34 is admitting they they are flawed.
1:37 admitting their flaw and and fixing the
1:39 flaws, staring into the mirror and
1:42 fixing uh the person uh that they are
1:46 because most people uh most people are
1:49 just uh incompetent, inadequate and uh
1:53 not built to succeed in trading
1:55 automatically. They have to go and and
1:57 and forge themselves into a successful
2:01 uh trader
2:03 and that's not a bad thing.
2:08 Now in trading we have uh three major
2:12 concepts which are very often mixed up
2:15 due to the lack of reliable uh compiled
2:18 information on the internet. But here
2:20 you have it. You have technical edge,
2:22 you have riskto-reward ratio and you
2:25 have risk management. Three very closely
2:28 related but mixed up concepts
2:32 which will be cleared right now. uh
2:35 technical edge
2:37 excuse me uh technical edge is
2:43 and this is not some internet definition
2:45 this is my definition
2:48 right I don't I don't borrow information
2:49 from other people I create and author
2:52 information
2:53 right so a technical edge is a
2:55 databacked technical analysis system
2:58 which you deploy as your principal
2:59 trading strategy when uh participating
3:02 in the
3:04 very simple, straightforward and that's
3:07 a theme I want to uh to uh get you used
3:11 to in CU is I don't delve too much into
3:14 unnecessary details, right? So just keep
3:17 it short, sweet and useful.
3:21 Uh risktoreward is a measurable
3:24 quantification of the amount of money in
3:27 dollars or euros or whatever. uh the
3:30 amount of money you risk in order to
3:33 make a certain amount of money in
3:35 return.
3:37 Meaning if you're if it's one to one RR,
3:40 what does that mean? That means you're
3:42 risking $1 to make $1. One to two RR is
3:47 you're risking $1
3:51 in order to potentially make $2. one to
3:54 three are are is you're risking $1 in
3:58 order to potentially make $3,
4:03 right? And of course, the larger amount
4:06 you uh place in the trade, you simply
4:10 multiply that by 100 or thousand or
4:12 whatever.
4:16 And then you have risk management. Now,
4:18 RR, riskto-reward and risk management
4:20 are often mixed up. uh R or R is the
4:25 amount of money you risk
4:27 in order to potentially make a certain
4:31 amount of money. And risk management is
4:34 the art of closely monitoring,
4:37 quantifying, and controlling what
4:40 percentage or what percent of your
4:43 entire trading account you lose per
4:46 trade.
4:51 All right. And now we have a question
4:53 which is uh which one is more important.
4:59 And before we answer the question uh a
5:02 summary of these three technical edge is
5:06 basically your strategy.
5:11 RR is uh how much money am I risking in
5:16 order to make
5:19 how much money and risk management is
5:22 how much percent of my entire account am
5:25 I losing per trade
5:29 right is that clear and uh if you
5:31 haven't been taking notes up until now
5:34 then this is the time to stop pause the
5:36 video and grab a notebook and a pen
5:42 and uh start writing writing down
5:44 everything
5:48 right remember the previous lecture I
5:49 told you to
5:52 have a specific notebook for CU
5:56 right
6:02 I'll give you 10 seconds to
6:06 get a notebook All
6:21 right. Uh, some of you did, some of you
6:23 didn't. And if you didn't, then go and
6:25 get it right now.
6:29 Now, which one is more important? uh
6:31 technical edge uh win rate or RR and
6:36 risk management. And this is a question
6:38 I want you to answer in your head right
6:40 now before I reveal the answer. Which
6:43 one is more important or do they have do
6:45 they carry the same weight?
6:50 I'll give 5 seconds.
6:55 Now if you answered
6:57 technical edge
6:59 and win rate then you are wrong.
7:06 Uh the more important concept to master
7:10 and understand and prioritize is RR and
7:14 risk management.
7:16 And the reason for this is simple.
7:20 Uh if you have
7:23 uh your risk management on point
7:28 then you can lose
7:34 you can win you can lose you can make
7:35 money you can lose money and over a
7:37 large enough sample of trades you will
7:40 end up being profitable
7:44 right obviously with CRT and turtle soup
7:46 with my system uh you will have a higher
7:48 win
7:50 if you follow the teachings. Uh but even
7:52 if you don't then risk management uh and
7:56 a good risk ratio will save you. If you
7:59 have a very very very high win rate 90%.
8:04 Uh which none of you is going to have.
8:06 So let's say 70 60%. If you have a which
8:09 is considered pretty good by the way. If
8:11 you have 60% and that's an excellent win
8:13 rate. If you have 60% or 70%
8:18 uh win rate and you you win nine trades
8:23 in a row,
8:25 right? Or eight trades in a row.
8:32 You can easily blow your account on the
8:35 next trade because you don't understand
8:38 risk management.
8:42 And that's an example I give uh often to
8:44 both uh to my students in order to
8:47 demonstrate
8:49 uh and drill the idea of the importance
8:53 of risk management.
8:57 Risk management prevails over your win
9:00 rate and your strategy.
9:03 Right? It is the uh it is the foundation
9:10 that you stand on. It is the mountain
9:14 that you go and you you you
9:16 uh you rely on and you can lay back on
9:19 it and it'll hold you when times are
9:22 tough, when you're on losing streak,
9:24 when you're uh when you're not so on it,
9:28 right?
9:30 uh when you are having a bad time and
9:32 letting your life affect your trading,
9:36 right? You're fighting with your wife,
9:37 fighting with your family and or your
9:39 husband, and you're letting your
9:42 personal problems spill into your
9:43 trading,
9:45 therefore [ __ ] up your trading.
9:50 Maintaining a good risk management will
9:53 keep you alive long term.
9:57 Now when you pair
10:00 good risk management with a high win
10:02 rate then that is uh the recipe for
10:06 exponential growth and that comes after
10:09 a long time and a lot of practice but
10:12 once it comes uh it's yours forever and
10:16 it's very very worth
10:18 uh the long wait
10:21 Right
10:26 now another reason the uh that risk
10:28 management uh prevails is
10:34 the streak of death. That's what I call
10:36 it. Uh and it is the concept that every
10:40 single trader no matter how experienced
10:43 will be faced by the eight trade losing
10:46 streak. It comes unannounced,
10:51 right? It's it's a lethal unpleasant
10:53 surprise to the unexpecting trader. No
10:56 matter how good you are, if you trade
10:59 long enough, then you will be faced by
11:01 an eight trade losing streak, which
11:04 means you will place eight trades and
11:08 you will lose them all. If you don't
11:10 have a good risk management when you
11:13 face this streak of death, then uh your
11:18 account will be blown.
11:20 And rule number one in trading is
11:22 preserve your capital because if you
11:23 have no capital, you can't trade,
11:27 right?
11:32 If you have an account, then you can
11:34 make a mistake and you could place
11:36 another trade and fix your mistake. But
11:38 if you have no if you have no more money
11:39 left in the account, right? If you
11:40 completely if you take the account from
11:42 $10,000 to $0, then you uh you can't
11:47 trade anymore.
11:49 Unless, of course, you go and deposit
11:51 more. Uh uh which is never the solution.
11:54 The solution is never to keep depositing
11:56 more money, right? That's just silly
12:00 because insanity or stupidity is doing
12:02 the same thing again and again expecting
12:04 another result, right? So depositing
12:06 more is never the answer. even though
12:07 it's very tempting, right? It's like a
12:09 it's like a restart button. And that's
12:11 where you can go down the casino
12:13 mindset.
12:15 Just deposit more and play again. That's
12:17 not how trading works,
12:21 right?
12:22 It is the reality of most traders, but
12:24 that's not how it's supposed to work.
12:27 uh
12:29 fix your mistakes
12:32 and uh preserve capital because you
12:34 never know when uh the streak of death
12:37 is going to come. It could be your next
12:40 trade, right? And it should be on your
12:42 mind when every single time you place a
12:44 trade.
12:46 Uh yes, every single time you place a
12:50 trade, you should have it in the back of
12:52 your mind that you know what, this could
12:54 be the beginning of an eight trade
12:56 losing streak. Am I risking adequately?
13:01 Uh and yes, you can go ahead and say,
13:03 you know what, doc, that sounds a bit
13:05 paranoid. And I will answer that with uh
13:09 yes, it is.
13:12 I am a very very paranoid conservative
13:15 trader and that's how I've reached uh
13:18 the level I've reached
13:21 by being very paranoid and very very
13:24 conservative
13:27 because I'm controlling my risk I have
13:30 limited risk
13:33 and
13:35 therefore uh unlimited or asymmetric
13:38 reward
13:41 All right. And uh only the paranoid
13:44 survive folks.
13:49 Now here's another table.
13:52 Uh once you understand this then you
13:54 have uh this this table gives you the
13:57 confidence in the power of risk to
14:01 reward ratio.
14:03 Right? So one thing is risk management
14:05 and another thing is uh risk to reward
14:08 ratio and this will be this will all be
14:10 part of the exam. So you know study hard
14:15 uh next year now
14:18 uh with a 1:3 let's start from down with
14:22 a 1:3 risk to reward ratio
14:26 you need to be
14:28 you need to have a win rate of 25%
14:33 to make money right which means if you
14:38 are using a fixed one to three
14:41 riskto-reward per trade. And um I don't
14:45 advise using fixed riskreward, right?
14:47 We'll get into that later. But if your
14:49 average risk-to-reward ratio is 1 to
14:52 three, then you only have to be right
14:56 a little bit more than 25% of your
15:00 trades to make money. Which means you
15:03 can lose out of each 10 trades, you can
15:06 lose seven trades and you will still
15:08 make money.
15:11 If you have a 1:2 risktoreward ratio,
15:15 which means you risk $1 to make $2, then
15:18 you have to be right a little bit above
15:21 uh 33% of the chance only in order to
15:24 make money,
15:26 right? Which means you can lose out of
15:29 every 10 trades, you can lose six
15:31 trades.
15:33 And if you only have a 1:2
15:35 risk-to-reward ratio, then you make
15:37 money, right? and so on.
15:45 And of course, the more you uh decrease
15:49 the risk to reward ratio,
15:52 the more win rate you need, right? But
15:54 but we're aiming for the last one,
15:56 right? Which is uh a one to three, which
16:02 is pretty reasonable. It's not too uh
16:03 exaggerated.
16:05 uh aim for a uh an average like most of
16:09 your trades will be one to three
16:10 riskto-reward
16:12 and that way you only need to be right a
16:16 little bit more than 25% 25% of the
16:18 trades you take uh which means if you
16:20 are right
16:22 three times out of every 10 trades
16:25 you'll make money. If you are right 30
16:28 times out of every 100 trades you you
16:31 you take you will make money.
16:35 And that's that's something uh to pause
16:38 and think about cuz that is that's
16:41 incredible,
16:42 right? The power of blending risk toward
16:47 with
16:49 understanding
16:51 just how little you need to have,
16:54 how little of a win rate you need to
16:56 have.
16:58 Blending that with with uh risk
17:00 management is a magic potion
17:07 for uh consistent
17:11 compounding growth which over the years
17:14 uh ends up being something massive
17:16 because uh as the saying goes in Arabic
17:23 mountains don't be little a small One,
17:28 mountains are made from pebbles,
17:34 right?
17:41 Journal, journal,
17:45 journal.
17:50 The most important trading book you will
17:53 read in your life. uh after my book is
17:57 your own trading journal.
18:04 Right?
18:07 Again, the most important trading book
18:10 you'll read in your life is your trading
18:12 journal. Uh most of you probably don't
18:16 even have and I'm pretty sure don't even
18:17 have a physical book.
18:20 uh probably not even a digital like
18:23 organized book where you journal your
18:27 trades and that is that applies to most
18:30 traders. Most traders do not have a
18:34 trading journal and most traders uh
18:38 fail.
18:44 it fail miserably long term.
18:50 Now why journal
18:54 in every single profession in life and
18:57 again uh I'm going to remind you mid
18:59 lecture again and again uh to make sure
19:02 to note things down
19:08 right and later I'll include a note
19:10 takingaking guide uh in the private
19:13 group right but take notes
19:17 uh why a journal because every single
19:18 professional in Every single profession
19:20 around the world journals in some in
19:24 some way, shape or form. Uh the doctor
19:28 right when I have a patient then I have
19:30 to uh when he comes in before touching
19:34 him I have to ask him his medical
19:37 history, his allergies, his uh you know
19:40 I I I register information in a piece of
19:45 paper. Same thing with the engineer,
19:48 with the lawyer, uh with even the
19:51 cashier has to give you a receipt at the
19:53 most basic level. Uh so journaling and
19:56 registering information is a part of
20:00 every single professional. So you as a
20:03 professional trader, why should you not
20:05 journal,
20:11 right? It's a very very powerful tool
20:14 and it is uh I dare say it is the
20:18 difference between a profitable trader
20:20 and a nonprofitable losing
20:24 gambling addict.
20:26 Right? They're not even worthy of being
20:28 called traders. If you don't have a
20:30 trading journal, then you're not worthy
20:31 of being called a trader. You're just
20:33 gambling and playing around. You're not
20:34 you're not serious about this, right?
20:36 Because the more serious you are about
20:38 trading, then the more effort you put,
20:41 the more money and time and and and
20:44 mental fatigue
20:46 uh you spend,
20:50 right?
20:52 Uh so you can uh you can quote me on
20:55 that which is
20:59 the difference between a profitable
21:02 trader and an unprofitable trader is
21:07 the trading journal
21:11 right
21:16 now. Uh journaling rules. Have a
21:20 physical book for journaling.
21:25 Journal every single trade you take.
21:28 Yes, every single trade you take. No
21:30 exceptions.
21:34 Including before, during, and after uh
21:36 photos and details of each operation.
21:38 For example, uh I'm looking there's it
21:43 doesn't have to be too complex, right?
21:44 Because I know some of you will will go
21:45 down the hole of
21:48 focusing too much on the journal and
21:51 therefore less on the trading itself
21:55 and vice versa. Right? But uh balance is
21:59 the key to life and is also the key to
22:02 journaling. Right? So you should have a
22:05 quick example is uh I'm looking to buy
22:08 Bitcoin at so and so
22:11 before with a picture at so and so key
22:14 level uh before during after during
22:18 Bitcoin has reached uh the key level
22:22 and I'm now buying because of so and so
22:25 and then after the trade is over which
22:27 is either by the stop-loss or the target
22:30 right so the trade is over
22:33 uh either by hitting your stop loss or
22:36 by hitting your uh target or by you
22:39 deciding to manually close it because
22:41 you didn't like the reaction
22:43 which is also valid,
22:46 right? But every single trade you take
22:47 should be journaled with photos and
22:49 details of each operation before,
22:51 during, and after. Uh some more tips is
22:55 write about your emotions and re and
22:58 reactions,
22:59 excuse me. And this is not something to
23:01 gloss over. Write about your emotions
23:05 and reactions to price and to each trade
23:09 you take because eventually and this is
23:12 going to be part of the second video
23:13 library is a very high level of trading
23:15 is trading on emotions.
23:19 Now it doesn't mean trading emotions. It
23:22 means trading based on emotions of the
23:25 masses which is something you'll learn
23:27 later. Right? uh use encouraging
23:29 language in your journal. Don't insult
23:31 yourself. Don't say you suck, you're
23:33 [ __ ] right? And I'm pretty sure
23:35 you've been through that, all of you. Is
23:37 you lose and you start, you know, you
23:39 take it out on your family, on your
23:40 friends, you um uh abuse yourself. Uh
23:46 and it can range from a very very low
23:48 level of, you know, just self like
23:51 punching the wall
23:53 or um cursing your whoever is near you.
23:58 uh all the way up to suicide and I've
24:00 seen all uh cases
24:03 uh may God prevent us from reaching that
24:06 level right uh so it's very important to
24:09 train yourself to not overreact use
24:12 encouraging language in general don't uh
24:15 insult don't cuss yourself don't abuse
24:16 yourself and don't curse yourself right
24:19 uh be very pragmatic be very logical be
24:22 uh in trading be emotionless
24:29 Right.
24:31 Uh and the journal, one of the biggest
24:34 uh goals of the journal is to become a
24:36 mistake correcting machine
24:39 because uh the goal is not to have
24:42 pretty pretty drawings and pretty
24:44 photos. Uh that's good because it shows
24:47 that you're good and because how you do
24:49 one thing is how you do everything,
24:51 right? If you have a pretty journal,
24:52 that means you are good. You're an
24:54 organized person. But never miss the end
24:57 goal of the journal, which is to correct
24:59 your mistakes.
25:01 Because what matters more than the
25:02 glitter and the glamour and the uh the
25:05 outfit is the result and the action, the
25:09 substance,
25:12 right? You're using you're using the
25:13 journal in order to correct your
25:15 mistakes.
25:16 You
25:18 make mistakes in trading. You lose. you
25:20 [ __ ] up. You don't know what you're
25:22 doing.
25:25 That is going to be corrected by your
25:29 trading journal,
25:34 right? Um and it can be summarized
25:37 really in
25:39 uh my law of journaling which is win
25:42 journal repeat lose journal avoid miss
25:45 journal catch next time. Uh this is uh
25:49 the summarized assessment after each
25:53 uh trade,
25:58 right?
26:02 Uh I hope you found that insightful.
26:06 I wish you good luck, good trading, and
26:09 see you in chapter 7.