Are you determined to excel in the competitive world of trading the financial markets? If your answer is a resounding yes, equipping yourself with the proper knowledge, skills, a probability thinking mindset, and professional tools is crucial. In this fast-paced and ever-evolving landscape, relying on luck or primary resources won’t cut it. To stand out and succeed, you need to go the extra mile.
Trading is not for the faint of heart. It’s a high-stakes game where professionals compete fiercely to gain an edge and come out on top. But don’t be discouraged. With the right approach and preparation, you can level the playing field and position yourself for success.
The first key ingredient to your success is knowledge. Trading the financial markets requires a deep understanding of various concepts, including fundamental and technical analysis, market dynamics, risk management, and trading psychology. Learning from experienced traders and industry experts can provide valuable insights and help you navigate the complexities of the markets.
Alongside knowledge, developing the necessary skills is paramount. Trading is a skill-based endeavor that requires discipline, patience, and the ability to make calculated decisions under pressure. Sharpen your analytical skills to evaluate market conditions, identify trends, and determine entry and exit points. Develop risk management skills to protect your capital and manage your trades effectively.
One critical mindset that separates successful traders from the rest is probability thinking. Embracing the uncertainty of the markets and understanding that every trade has an inherent level of risk is crucial. Rather than seeking certainty, focus on analyzing probabilities and risk-reward ratios. Adopting a probabilistic mindset allows you to make informed decisions based on statistical probabilities rather than relying on emotions or gut feelings. It helps you maintain a rational approach and avoid impulsive actions leading to costly mistakes.
Moreover, collaborating with mentors provides valuable support and guidance. Remember, trading the financial markets is a competitive endeavor. Professionals are always ready to win, and the stakes are high.
So, if you’re genuinely committed to excelling in the competitive trading world, invest in yourself. Expand your knowledge, develop your skills, embrace probability thinking, and leverage professional tools. With the right mindset and preparation, you can confidently navigate the markets and seize the opportunities that come your way. Success awaits those willing to put in the effort and strive for excellence in this exciting and challenging field:
- Trade from the comfort of your home or any place with solid internet access
- No need to convince clients or cope with no or late payments
- Choose from a wide variety of instruments, the ones that fit your style and available time for trading
- Work fewer hours a day
The stock markets in 2023 moved sideways; hence, longer-term buy and hold is no longer a successful strategy: shorter-term engagement provides the best basis for producing long-term income.
Stock Market Development 2022 to 2023
The S&P 500, based on SPY (ETF), showed expanding purple zone (directional price ambiguity), indicating that longer-term trades do not pay off well. Hence, committing to a shorter-term approach is the right choice, and today we want to focus on day trading: opening and closing positions on the same day.
Day trading offers distinct advantages over longer-term investing:
While day trading offers advantages, it also comes with challenges and risks. As a day trader, you need to control multiple variables which are critical for your success:
Critical Variables for Day Trading
Times of critical news events: Day traders pay attention to scheduled news releases and economic events that can significantly impact the market. They may adjust their trading strategies or avoid trading during these periods of high volatility.
Price momentum: Day traders seek stocks or markets that exhibit solid and rapid price movements. They aim to capitalize on short-term price swings by entering trades toward the prevailing momentum.
Pre-orders: Day traders use pre-orders to set buy-stop and sell-stop limits and bracket orders on indications of potential price moves: this allows them to enter or exit trades automatically once the specified price levels are reached.
System-defined entry, exit, and stop at high-probability setups with applicable risk/reward relations: Day traders follow a systematic approach that defines specific criteria for entering trades, exiting trades, and setting stop-loss orders. These criteria are based on high-probability setups and are designed to maintain a favorable risk/reward ratio.
Supply and demand levels that attract or reject price moves (channels): Day traders identify critical supply and demand levels on price charts, which act as support or resistance zones. These levels help traders gauge where price may find buying or selling pressure and make trading decisions accordingly.
Price patterns: Day traders analyze various price patterns, such as trendlines, triangles, or flags, to identify potential trading opportunities. These patterns can provide insights into market sentiment and help traders anticipate price direction.
Maximum price move expansion: Day traders calculate the potential maximum price move based on historical data or volatility indicators. This information helps them set realistic profit targets and manage risk by adjusting position sizes or stop-loss levels.
Minimum price unit move to accept $250: Day traders determine the minimum price movement required to achieve a profit of $250 based on their trading strategy and risk tolerance: This helps them assess the feasibility of potential trades and set appropriate profit targets.
Liquidity: Day traders prefer trading in liquid markets to ensure they can enter and exit positions quickly at the desired price levels without significantly impacting the market.
These keywords provide essential concepts and considerations for day traders as they analyze the market, identify trading opportunities, and manage their positions effectively.
Unfortunately, most day traders tend to overtrade and, by their constant participation, reduce their profitability expectations. The mindset of a high participation rate will be detrimental to your account balance, and we will put proof to this:
In our concept of day trading, we want NLT users to strive for a minimum return per trade of $250 and consider a 1.2 times risk related to a risk of $300 per trade. Therefore, for calculating how often you want to trade an instrument to achieve the highest statistical expectation value, we need to consider various combinations of wins and losses:
| W: Win | P(W): Probability of winning (70%) | G: Gain per trade ($250) |
| L: Loss | P(L): Probability of losing (30%) | L: Loss per trade ($300) |
In the next step, we create a probability table for different scenarios considering trading one, two, or three times a day, integrating the probability of a series: When you have a 70% chance of winning, the statistical likelihood of winning three times in a row is 70% x 70% x 70% = 34%.
Probability Calculation for Day Trading
The “Probability * Net Gain” column represents the product of the probability and the net gain for each scenario
The probability of each scenario was calculated by the binomial coefficient formula: P(X=k) = (n C k) * p^k * (1-p)^(n-k)
The table shows that the trader striving for one trade per day produces the highest expected income, 70% higher than the expected value of striving for two trades per day. Conversely, trading three times a day has a negative expectation value.
Resulting action:
- Fold trading is the instrument of choice after the first winner, which gives a 70% higher income expectation than a two trades per-day focus.
- If your first trade loses, risk a second but only at high probable setups.
- Never trade more than two times in a day because three trades have an overall negative expectation value
- To strive for additional streams of income, trade multiple uncorrelated instruments like a Stock Market Index, Crude Oil, and Euro/Dollar. In the following, we share examples of those futures contracts.
We combine breakout and momentum indications and strategies for acting at high-probability setups with a 70% chance of forecasting the price move. Critical day trading breakout zones are color-coded in gray, yellow, and green, and we teach you to combine solid directional signals with those channel breaks to obtain increased probabilities with the following:
- System-specified price thresholds to enter trades so that you can operate with buy-stop and sell-stop orders in the development of a price move
- Forecasting high probable exit points where your trades close with limit-orders
- Set risk/reward-adequate stops to bring your trade to target and not violate risk acceptance rules
- Accepting strong price move indications only when the price breakout of a system-specified price-containment or channel breaks without hindrance to the target.
- In our future trading examples, to strive for the desired target of ≥ $250 income per trade, you would trade two /6E (Euro/Dollar) and one /ES (E-Mini S&P 500 contract) or one /CL (Crude Oil contract). The required margin per trade varies by broker between $500 and $12,000. If you can trade CFDs, your margin requirements provide the highest flexibility and vary by broker.
NLT Timeless Day Trading at Channel Breaks
On the above day trading chart, you see two channels: gray and yellow. High probability setups are when price moves breakout of the channels or revert to the channel.
Situation-1: Buy > $1,0808, breaking out of the channel and reaching its target (gray dot)
Situation-2: Sell_T < $1,0822, moving towards the gray channel, reaching its target (gray dot)
Situation-3: Buy > $1.0819, passing the yellow channel and reaching its target.
Next, you see a live trade on the NLT Timeless Crude Oil Futures chart where the price moved back into the channel and was assumed to get attracted to the opposite channel border: Buy > $72.35 was suitable for a price change of the underlying contract of about $600, and the trade came to target in about 20 minutes. The chart we share shows the trade entry screenshot:
- Operating with buy-stop orders, the trade filled in the next candle’s price movement by surpassing the price threshold of $72.35
- The stop for the trade was dimensioned below the dashed gray line and kept risk/reward in a favorable relation
- The trade target was right below the yellow channel border and reached by the commencement of the price movement of the Crude Oil Futures Contract.
Yes, all three trades came to target; however, with your new knowledge, your best chance was to move to the following trading instrument to trade with the odds in your favor.
NLT Timeless Day Trading at Channel Breaks
The crude oil example shows you trade with a $600 reward expectation and a referring $720 risk: $250 is just our minimum expectation for a unit of reward to strive for.
The chart shows the screenshot at entry, and you see the upper yellow channel border as a strong attraction point, like a price gravitation point. So we took profit right before this border and closed the trade.
Day trading, at any instance, we work with buy-stop or sell-stop limit bracket orders, which helps traders to:
- Pre-enter the order instead of acting after the fact when an NLT price threshold is surpassed
- Having the target in place at the entry
- Giving the trade enough room to unfold by an adequate stop.
We tell our students: to act like mountain lions, waiting for the moment a trade with specific conditions comes their way and then strike, act, putting the order in the market. But, unfortunately, constantly running after prey is not a successful concept, and you now have statistical proof.
NLT Timeless Day Trading at Channel Breaks
The trade was good for a $262.50 price move per contract, following the NLT principles.
Patience is a virtue in trading. The most accomplished traders understand that waiting for the right opportunity is often more rewarding than chasing every trade. As a result, they possess the patience to wait for high-probability setups, allowing them to enter positions with a better risk-reward ratio. Patience also helps traders withstand temporary market fluctuations without succumbing to fear or greed.
Odds Based Trading
Traders are probability thinkers; they act when it is highly probable to win. We help our subscribers to specify those action points with odds-based decision-making models. The above table is for day trading by combining NLT TrendCatching and Timeless Indicators. Following the model, solid traders wait for NLT Floating signals at a channel-breaks to act. In addition, they check for volume support and ensure no hindrance is in the way of an evolving price move.
The patience to wait for the right moment bends the odds in your favor; widespread trading is not a successful model.
When you are ready to commit to high-probability trading systems and strategies, we will determine which system fits you best in a joint online session:
contact@NeverLossTrading.com Subj.: Demo
NeverLossTrading is a trading education and software company that aims to help traders improve their performance and profitability in the financial markets by:
- Personalized Coaching: in one-on-one sessions, you learn customized trading strategies that fit your unique needs and goals. This personalized approach can help traders better understand the markets and make more informed trading decisions.
- Trading Software: NeverLossTrading offers proprietary software that provides real-time market analysis and trading signals. Our indicators are designed to help traders automate their trading decisions and execute trades with greater accuracy and efficiency.
- Comprehensive Training: We provide extensive training and education materials to help traders learn the fundamentals of trading and develop the skills and knowledge necessary to succeed in the markets.
To succeed in trading, you best work with an experienced coach. Our #1 competitive advantage is the support and customer service we offer. Veteran traders have been through more ups and downs than you can imagine. So, experienced pros have probably experienced whatever you’re going through.
If you are ready to make a difference in your trading: We are happy to share our experiences and help you build your trading business. Trading is not a typical career, and you best learn from those who are long-term in this business to cope with the rollercoaster of the financial markets. We are here to help and provide feedback on what you might be doing right or wrong. Strive for improved trading results, and we will determine which of our systems suits you best. The markets changed, and if you do not change your trading strategies with them, it can be a very costly undertaking. The markets changed, and it can be expensive if you do not change your trading strategies with them. However, you can make a difference with the right skills and tools!
Hence, take trading seriously, build the skills, and acquire the tools needed. Trading success has a structure you can create and follow.
Thomas Barmann (inventor and founder of NeverLossTrading)
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