All language subtitles for 2. what is an edge

mind think of the long term and
as you get you know further

tails and what we need to do is
not do what I'm doing right now

the start will just flatline
out to a very smooth line

down it's yours to keep for
life but yeah I hope that's

know that that high a risk
reward which we're going to get

just won't work. So yeah if
you're ever not sure about what

more number of trials and so
literally just flat lines at

and smaller ostellations as the
further it goes out with the

edit and you know play around
the spreadsheet and save it

play out over time. So if you
click on the link below below

flipping in a row and then you
need to try and remember this

to actually see you know how
your underlying profit

expectancy to actually play out
so that's what these two

because for instance if you
were to put this to a pound

of volatility at the start but
then you just zoom out in your

in a row right and you start to
doubt question hesitate

20 flips and I think you will
be surprised at kind of you

actual trading and then develop
a strategy that actually has a

exercise is just to see that at
the start right your profit

around the numbers you know see
how much you want to skew it

you should be on zero it should
net each other out but as you

know almost one pound a flip
all the way down to you you'll

know how many heads or tails
you can actually end up

expectancy you would expect if
you were to do you know 500 or

markets right and you know you
a good edge you've seen that

your profit expectancy is
actually slightly higher at the

really see that the true random
nature of how these edges can

actually do have a profit
expectancy but the more that

flipped you know more heads
than tails because you know

and your you know your average
profit for roll should come

expectancy could look really
awful or it could look

experiment I guess when you're
actually trading in the live

profit expectancy should be
five cents but at the moment

area in which you need to input
data is and B down here this

probability. So how can you
ensure that your proven

lot higher the more that you
put it in your favor so on and

performing quite well so what
that means is you've actually

and then it will get slowly you
know kind of getting smaller

moment you know more than what
the calculated profit

these results and what that's
telling you is actually your

it there and then what it will
do is it will just

repeatedly as many times as you
as you possibly can so The only

just because you know it's
really good to kind of see

you're actually given to the
spreadsheet so it's based on

giving you a bit of an insight
into what an edge actually is

everything just grab a coin and
do this and you'll see you know

strategy before the edge has a
chance to play out. You know,

go negative and it will just be
like this big sort of heartbeat

into those trials what you'll
see is this big volatility at

the end of the curve around
whatever the calculated profit

brilliantly and then over time
then right it will adjust and

calculated profit expectancy
should be so you know I really

numbers are here so one is the
calculated profit expectancy

random distribution you've had
more heads than you would

through. So in trading never
confuse luck with skill and

just grab a coin and then just
put in each result as you get

do encourage you just grab a
coin even if you just do 10 or

be really volatile. It'll be
all over the place like you

tails so because you have a 10
pence profit gain essentially

1, 000 flips really you should
only have a 5 cents edge

profit for you so let's say we
flip a few heads couple of

down to zero a flat line out
but if you actually grab a coin

there should be the same amount
of heads as there should be as

you have done so far the amount
of you know information that

can see because we've had more
heads here at the moment you

expectancy is. So the main kind
of learning point from this

and you'll see that at the
start your average profit will

but eventually as you play more
and more games or take more and

expectancy that is based on the
amount of you know coin flips

honestly how long it sometimes
can take for the true profit

more trades with that positive
edge eventually you will arrive

so forth so yeah just you know
play around with it save it

and you do this for real what
you'll see is in sometimes you

and then one is the true profit
expectancy so again if you

then how much you would lose
and then the only sort of next

over you know whether you lose
that's why the calculated

know grab a coin and just do
this maybe for you know, 2030

words if you have a proven
mathematical edge and a proven

and flip the coin and just
populating this just to see how

profit expectancy it's in your
best interest to play it

can even have like 1011 maybe
even heads or tails in a row

closer as more trials are
performed so in much simpler

have to learn to emotionally
deal, right? Emotionally deal

what is a true edge it's a 50/
50 right so really in reality

according to the law the
average of the results obtained

results and then trust in the
long-term stability as your

kind of be lazy here and not do
this but even if you just you

expected value and then it will
tend to become closer and

right and it was even then
really over the long run right

flips the spreadsheet does go
down all the way down to 500

you can get lucky and you can
fall the numbers in the shorter

portrayed for your strategy. So
as a trader, you're going to

down so yeah it's yours for you
to keep for life now there's

probably expect over a large
number of trials so that's why

you would fill this out over
time right this should even out

you know quite a few winners in
a row and be up straight away

profit expectancy is you know
quite a bit higher you're

you know the edges just worked
in your favor just through

curves that actually all have
the same profit expectancy. So

plus the loss which is minus
one pounds multiplied by the

because if you put a negative
number the form is basically

expectancy of your strategy and
of your edge actually starts to

multiplied by the probability
of winning which is nought. 5

the graph sort of look so you
know it's pretty easy to

at the expected of that edge.
The expected average profit

column here which is
essentially where you just put

allow you to do is just really
give you a good understanding

and it should have already ask
you to save a copy down to your

in the notes of this video it
should hopefully open this up

and now over the course of the
the remaining lessons of this

amount that you lose you still
put in a positive number

way that you can ensure that
your edge pays out over time is

hover your mouse it will give
you a bit more of an better

edge starts to play through. So
whether you experience a run of

flip ahead so let's just put in
one pound and then how much you

but actually take the time you
know to put this in you know

and actually losing money
initially and others might hit

bit more information. So yeah
put in how much you win and

a little pop up should come up
and it just gives you a little

diagram essentially shows is
different people's profit

lose if you flip a tail. So you
know play around with it with

then just click on file in the
top left hand corner and then

in yeah whether you flipped
heads or tails so literally

explanation but essentially the
true profit expectancy is the

only really a couple of things
that you need to enter the

whatever amounts that you like.
Just make sure that for the

just so you guys can actually
create your own coin toss

begin the game with Sam
flipping three tails in a row,

to be a positive number
remember yeah then you will see

spreadsheet so the first one
being how much you win if you

into a little bit later in this
module yeah and you'll just

row, you must know that soon
you will experience the

with that uncertain volatility
in the short term of your

own drive but if for whatever
reason that hasn't happened

every single coin flip so if he
has a proven edge he must be

experiment yourself and what
spreadsheet will essentially

save it down to your own drive
you'll then be able to actually

to keep applying that edge over
and over again. So what this

come down to make a copy and
then when you click that and

opposite until it balances out
and you reach the average

it will come back to that
balance of where the actual

module we're going to learn you
know how we can apply to our

you've tested it and you've got
a pretty good strike rate and

profit for your strategy. So
I've created this spreadsheet

some might hit quite a few
losers in a row at the start

each what each cell does just
hover your mouse over and then

around where that profit
expectancy is so yeah play

casino tables and they all have
a negative profit expectancy

obviously the more that you
increase your edge whoops needs

the the the calculated profit
expectancy will obviously be a

play out and you just have to
remember that there'll be a lot

a 50% strike rate can be pretty
good especially if you have you

then suddenly you sit there and
you take 345 maybe six losers

consecutive losing trades in a
row or a run of winners in a

expectancy but they quit, walk
away, or they change their

against Sarah. So how can you
make sure that your proven

profital edge plays out? And it
all comes down to understanding

can't handle the pain of losing
anymore so he decides to shake

time. They have a great
strategy with a strong profit

from a large number of trials
it should be close to the

performing the same experiment
a large number of times and

of those people who win big in
the lottery or big at the

basically a theorem that
describes the results of

their negative profit
expectancy had a chance to work

the law of large numbers. So
the law of large numbers it's

expectancy, it will always work
through. Now, we've all heard

profital edge always works
through and take advantage of

term but over time and
distance, your true profit

automatically fill in the the
profit and loss and a running

but if he flips a tail and he
loses then he loses one pound.

probability of winning plus the
size of the loss times the

remember our profit expectancy
formula? Previously, Sam won a

they got lucky in the short
term and they cashed out before

situation is zero pounds. He
cannot make money in the long

playing these games but like
Sarah in the scenario above,

pence difference can be an
absolute game changer. So

ninety pence for every tail
that lands. However, he just

term. So let's the numbers a
little bit now and see if you

the edge that Sam had managed
to negotiate in his favor

favor. Yet he still lost and
this is what traders do all the

probability of losing which is
nought point five. So from a

flip so the profit expectancy
formula this proves that Sam

pound for heads and lost a
pound for tails so his profit

pounds just like before.
However, if Sam flips tails and

hands and hand over the winning
Sarah and he walks away. So

negotiates with Sarah and they
come to an agreement that if

right? It's a perfectly
realistic scenario in a coin

trading, then we need a formula
to help us calculate our profit

now has a profitable edge in
his game of five pence for

expectancy was zero pounds but
now he's negotiating is to to

coin toss. So, there are two
possible outcomes, right? Heads

pay Sarah 10pence less when he
loses and flip sales this means

toss. Sam has now had three
losses in a row and he's now

Sam flips heads, then Sarah
still has to give him one

here, Sam played a game with a
proven mathematical edge in his

guaranteed to make money now
right well not necessarily

well Hopefully for those who've
guessed correctly, zero pounds

that he now has a profit
expectancy of five pence per

the random event becomes a
little bit more complex like in

expectancy. So, let's summarize
what we already know about the

Sam flips a heads, in this
case, he will make one pounds

probability of losing. So the
profit Sam wins is one pounds

or tails and the probability of
either outcome is 50%. So, if

So the profit expectation is
the amount of profit times the

can make money from a coin
toss. So this time, Sam

of winning the same amount of
money. So in this situation,

because what Sam didn't discuss
with Sarah is how many games

mathematical standpoint Sam's
expected profit in the

they would play and this is
apps crucial. So let's say they

he loses, he only has to pay
Sarah 90 pence. And that ten

down minus two pounds seventy
because he has to pay Sarah

Sarah he's going to pay Sarah
one pounds so in this situation

it's pretty easy to work out
the profit expectation but when

is the correct answer because
they end up just cancelling

each other outright because
they have the same probability

how much money can Sam expect
to make from flipping a coin

ahead and then you divide this
by the total number of possible

for calculating the probability
of flipping heads the number of

this example we will calculate
the probability of flipping

coin toss game Sam is heads and
Sarah is tails now every time

heads on a coin is as likely to
happen as flipping a tails so

guaranteed no matter what now
the probability of flipping a

occurring it always has a value
between zero so 0% and one

Sam flips her heads and he wins
Sarah is going to pay him one

it has an even chance simple
right okay let's move on so

occurring is equal to the
number of ways that that event

outcome can't happen and one
represents a certain outcome is

can occur divided by the total
number of possible outcomes so

equal to a 50% chance so the
probability of any event

ways that this event can occur
is one right because there's

money into the mix so Sam and
Sarah are going to play the

how to calculate the basic
probability of a random so for

heads is just one divided by
two which is n1. 5, which is

tails right so pretty simple
now the probability of flipping

only one way that you can flip
ahead you just have to flip

ahead in a single coin toss so
the probability of an event

outcomes which is two because
you can only flip aheads or a

which is 100% so zero
represents an impossible

pounds and then every time Sam
flips a tails and he loses

let's make things a little bit
more interesting and throw some

understand but more
importantly, accept the

to memorize any of it for your
actual trading but it is

Why? Because it allows you to
realistically align your

probability models in trading,
it is important that you know

of a random event occurring. In
order to fully understand

concepts. In order for you to
trade successfully long term.

exactly how, when, and why you
have an edge in the market.

So, money and probability.
Probability is the likelihood

your journey. You know a
beginner they might find a

imperative for your trading
development that you truly

will cause them to start
looking for you know other

inevitable highs lows that
you're going to experience on

trading that you must
understand in order to become

So what this modular's going to
do is it's going to teach you

successful. Now, the maths is
very simple and you do not need

the basic very basic
mathematical principles of

and yet they become become you
know pretty disappointed after

system or strategy that's
supposed to win 70% of the time

any blockages that you may be
struggling with but it is my

not winning seven out of those
10 trades. And so often this

strategies or worse starting to
change their rules on the fly.

traders, they have developed a
thorough understanding of the

believe it's crucial to your
long-term success to understand

firm belief that if you can
really get a great

solve the majority of
psychological issues that you

actual practical tasks that we
can undertake to try to resolve

this before we even start to
hop on the charts and learn the

concept of what trading an edge
is and you know, I really

may run into. So, that's why we
have an entire module based on

technical side of the strategy
because the most successful

expectations and keep an
objective mindset through the

developing that probability
mindset, then this will likely

understanding of what trading
in edge is and really

and you know, deep concepts
that we'll get into much later

your mindset and psychology.
Now, there are many esoteric

massive part of successful
trading is really dependent on

in the program regarding
trading psychology and your

As you will have seen in the
previous lesson, a massive,

proven mathematical edge and a
high profit expectancy.