The Ranger

• ETA (Donny): Called in last week's NL with an entry of ~$545. Exited the day after earnings at $580 right before the stock started selling off in the final 30 minutes of trade heading into Payrolls. +6.5% unlevered gain in 24 hours

The Subtle Art of Doing Nothing

Trading is exciting, especially when everything is still new. You'll likely feel like you want to take trades all the time, but here's the catch: sometimes, some might even say most times, the best course of action is to do nothing.

Boring, I know, but let me explain.

In trading, two things determine whether we make money or not. First, there's your win rate—how many trades you win versus how many you lose. Second, there's your RR. This is the amount of money you make on your winners vs. how much you lose on your losing trades.

If you win 8 out of 10 trades but those 2 losers lose you 10x more than your winning trades make in profit, then you'll be unprofitable.

Because of this, it becomes our job as traders to only take trades that are +EV, meaning our win rate and RR line up to ensure our profitability. 

But here's the problem: In most cases, the chart does not show where we have a +EV setup available. As traders, we want to be super particular about which trades we take and which we don't.

That's why it's so important to learn how to do nothing. You want to see a chart pumping without chasing it or seeing a chart dumping without feeling panicked. Focus on only trading where you have an advantage. 

Trade from a position of power, a specific setup you feel comfortable with, that you know works. One that's +EV. This could be longs at a major support, or you're trading order blocks. It doesn't matter how you trade if you take +EV trades with intention.

The market will be here tomorrow, but if you get too excited and chase poor trades, your portfolio might not be.

Disclaimer  

Wizard of Soho LLC and Weekly Wizdom publish financial information based on research and opinion. We are not investment advisors, and we do not provide personalized, individualized, or tailored investment advice, nor do we provide legal advice or information. The publisher does not guarantee the accuracy of the information provided on this page. All statements and expressions present are based on the author's or paid advertiser's opinion and research. Directly or indirectly, no opinion is an offer or solicitation to buy or sell the securities or financial instruments mentioned.

As news is ever-changing, the opinions included should not be taken as specific advice on the merits of any investment decision. Investors should pursue their investigation and review of publicly available information to make decisions regarding the prospects of any company discussed. Any projections, market outlooks, or estimates herein are forward-looking and inherently unreliable. They are based on assumptions and should not be construed to be indicative of actual events that will occur.

Contrarily, other events that were not considered may occur and significantly affect the returns or performance of the securities discussed herein. The information provided is based on matters as they exist on the date of preparation and do not consider future dates. As a result, the publisher undertakes no obligation to correct, update, or revise the material in this document or provide any additional information. The publisher, its affiliates, and clients may currently or foreseeably have long or short positions in the securities of the companies mentioned herein. They may, therefore, profit from fluctuations in the trading price of the securities. There is, however, no guarantee that such persons will maintain these positions. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile, or any other means is illegal and punishable.

Neither the publisher nor its affiliates accept any liability for any direct or consequential loss arising from any use of the information contained herein. By using the website or any affiliated social media account, you consent and agree to this disclaimer and our terms of use.