The speaker, Adam Koo, claims that trading the stock market is similar to a casino, where the house always wins due to a statistical edge. He explains that casinos rig their games to have a positive expectancy, while players have a negative expectancy.
Adam Koo argues that most people who trade stocks will lose money, around 90%, because they don't have a plan or strategy and make decisions based on emotions, rumors, or tips. They tend to win small and lose big, leading to an overall loss.
As a professional trader, Adam Koo claims to replicate the casino business model by studying the markets, looking for repeatable price action patterns, and using technical analysis to enter trades when the statistical odds are in his favor. He aims to have a 60% win rate and a 40% loss rate, with a risk-to-return ratio of at least 1:2.
By setting stop-loss orders and profit targets, Adam Koo guarantees a limited loss when he's wrong and a higher gain when he's right. He claims that even with a 50% win rate, he can still make a 50% return on his trades due to the risk-to-return ratio. Adam Koo concludes that professional traders can consistently make money by "rigging the game" of the stock market in their favor.
Here are the key facts extracted from the text:
1. Adam Koo claims to consistently make money as a professional trader.
2. He compares trading to a casino, where the house always wins in the long run.
3. In a game of chance, the casino has a statistical edge over the player.
4. The casino's edge comes from the way the game is rigged, with a positive expectancy for the casino and a negative expectancy for the player.
5. In roulette, there are 18 red numbers, 18 black numbers, and 2 green numbers (0 and 00).
6. The player's chance of winning in roulette is approximately 47.3%, while the casino's chance of winning is approximately 52.7%.
7. The casino's edge in roulette is 5.4% (52.7% - 47.3%).
8. For every $1 bet, the casino makes 5.4 cents in the long run.
9. 90% of people who trade stocks will lose money.
10. Most people who trade stocks do not have a plan or strategy and make decisions based on emotions, rumors, and opinions.
11. Professional traders study the markets and look for repeatable price action patterns to enter trades with a statistical edge.
12. By applying these patterns, professional traders can enter trades with a higher probability of success than a 50/50 chance.
13. Professional traders use stop-loss orders to limit their losses and profit targets to guarantee their winnings.
14. By risking a certain amount to make a certain amount, professional traders can create a risk-to-return ratio that is in their favor.
15. Over many trades (e.g., 100), the statistics will work in the professional trader's favor, resulting in consistent profits.