Unlocking the secrets to day trading success goes beyond a relentless work ethic – it thrives on the foundation of a sharp and discerning probability mindset. This article delves into what it truly takes to thrive in day trading, shattering the notion that success merely stems from hard work. Join us on a journey to unveil the key elements that set apart the triumphs in day trading, revealing the power of embracing a probability mindset for a flourishing income.
NeverLossTrading is not a vow of infallibility in trading; instead, it embodies the art of seizing high-probability price turning points, aiming for consistent income by skillfully averting drawdowns.
The 70% Dilemma
Consider a scenario where a specific setup or situation repeats itself with a 70% chance of winning. Now, how many consecutive wins would prompt you to fold? While some traders may be tempted to accept as many transactions as possible for this promising setup, embracing a probability mindset reveals the flaws in this approach.
Two Critical Reasons to Refrain
- Commission Costs: Each transaction comes with a commission paid to participate in the trade. Embracing every potential setup without discrimination can quickly erode profits.
- Wiggle Room Necessity: Realizing a 70% chance of winning requires flexibility to bring the transaction to the target. Unforeseen market fluctuations may necessitate a margin of safety for optimal outcomes.
Crunching the Numbers
Let’s delve into the numerical aspects of this probability dilemma. Assume a return of $250 per transaction, a $5 commission, and a wiggle room extending the target to 1.2 times the potential gain, i.e., $300. The probability table is then crafted, accounting for the likelihood of a series of wins.
For instance, with a 70% probability of achieving two consecutive wins, the long-run chance diminishes to 49%. Aiming for three consecutive wins further reduces the odds to 34%, leaving a 66% chance of encountering a losing streak.
Table of Expectation Values
A table calculates the expectation value of one, two, or three consecutive trades, multiplying the potential net income by the probability of a series and accounting for potential losses. The outcomes clearly show the risks and rewards associated with each scenario.
Winning Probability | Expectation Value
Conclusion: The Art of Knowing When to Fold
In day trading, wisdom is celebrating victories and knowing when to fold. Consider folding and basking in the glory of your first-day trade emerges victorious. If it incurs a loss, take another chance and resist the urge to overtrade in pursuit of redemption. This way, a probability mindset becomes your guiding light in navigating the intricate landscape of financial markets.
As we venture into the next phase, a pivotal question surfaces: How lucrative can this approach be? Picture this scenario: navigating the world of futures contracts, carefully selecting two highly tradable contracts to pursue those elusive high-probability setups. A return of approximately $250 per contract and trade beckons, with an encouraging caveat – when you hit the $1,000 mark per week trading a single contract, it’s time to fold gracefully.
The same principle applies to the avid day trader in stocks, albeit with a nuanced touch. Here, the quest involves employing a price pressure finder, a tool indispensable for cherry-picking stocks where prices dance to the rhythm of potential gains: Day trading stocks without price moves is dangerous.
Now, the lingering question echoes: how much capital must be summoned to orchestrate a weekly performance of $1,000?
Capital Requirement for Day Trading
Yet, if this sum appears formidable, fear not – for restraint is a virtue in trading. If the required capital seems beyond your current reach, the resounding advice is clear: do not trade! A shortage of adequate capital erects formidable barriers that can sabotage your journey to success.
Crunching the numbers, let’s establish a fundamental rule: each trade should pose a risk equivalent to a maximum of 5% of your holdings. Taking a hypothetical trading risk of $300 from our earlier example, the minimum capital to engage in this venture should be $6,000.
However, the grandeur of a $5,000 weekly income unfurls through a strategic dance of multiples. To earn this formidable sum, one must trade a multiple of the base unit and meticulously hold a corresponding multiple in cash. This financial ballet demands a stage adorned with $30,000 in this case.
As we navigate the intricate trading landscape, it becomes evident that success is not merely about seizing opportunities but strategically managing resources. The aspiring trader can unlock the gateway to a lucrative income through a blend of calculation and prudent decision-making. So, in the realm of trading, the mantra echoes loud and clear: balance, precision, and a calculated dance with risk are the keys to orchestrating a flourishing financial performance, and it all comes out to work with a system that helps you to specify high probability setups and not to overtrade on them.
Day Trading with NLT Decisions
After we explained how trading less and striving for a budget increases the likelihood of producing income, we now share ways of finding high-probability price turning points to act upon.
“Timeless trading” refers to a strategy that considers consistent price increments as the decision-making basis instead of price movement over time. This way, time is no longer a critical variable for forming trading or investing decisions. Our systems define which assets provide a solid basis for price moves, and we follow them with the NLT Timeless Concept.
NLT Timeless charts use system-defined price increments to determine crucial price turning points to act upon. For example, on the chart, candles are drawn purely price-based: when the price movement exceeds the specified increment, a new candle is added. With the help of indicators, traders can make high-probability decisions, where the system spells out the price threshold for entering, exiting, and stopping a trade, always keeping risk and reward in a meaningful balance.
A prerequisite for day traders: you must withstand the temptation to trade frequently instead of more accurately. You can increase your trading accuracy using dynamic, less predictable entries, exits, and stops. As a trader, you are a probability thinker, which means there is no 100% certainty that your decision will lead to a positive outcome. More frighteningly, 76% of day traders are losing money. Trading is not a game where the smartest are necessarily the best. If IQ were a ticket to riches in the market, many more successful traders would be there. From our experience, you need to put the odds in your favor by operating with a system and rules of 65% or higher predictability; otherwise, the chance for success will be random.
The worst trader has positive trades, but it is not about those but your average winning balance. Only when this is positive are you trading with an expectation of producing a return from your financial market investments.
What is the basis of your decision-making, and do you want to better your trading or justify that you were right because you had random wins?
Make a change to your trading:
- Decide on high-probability price turning points
- Be less predictable in your actions
- Follow a plan for trading success and strive for a budget
Read on to see how our charts tell when to buy or sell!
Trading is not an easy career: when you add up what it costs to not act at high probability price-turning points, you might be open to investing in a high-probability system and appropriate education.
We highly propose following a business plan for trading success that shall entail:
- Acting with a system probability > 65%
- Mechanical rules for entry, exit, and stop
- Trade at perfect moments only
- Consider overall factors, patterns
- Risk and reward in an acceptable balance
- Risk-averse trading
- Holding positions to target
- Do not add to losers
- Stick with a trading strategy. Follow a business plan – action plan and financial plan
- Trade for meaningful price moves
- Systematic trading
- Having a mentor to learn from
The typical problem for a trader: In hindsight, you know what happened, and we want to help you forecast future price development with high predictability.
With our systems and strategies, we want to help you to higher accuracy:
- Only accepting a trade when the direction is confirmed
- Exiting at a pre-defined target, preventing the price from pulling back, and taking your profits away before you realize them
- Choose an adequate stop so you are not taken out of a trade by a too-tight stop and keep reward and risk in a meaningful balance.
When day trading for pre-defined price moves, positions are kept open for a couple of bars/candles but permanently close the same day.
Our systems define the price increment to choose for setting up the charts, specifying two ranges:
- Shorter-term: holding open positions between two and 20 minutes
- Longer-term: holding open positions for 20 minutes to hours
We share examples for the E-Mini S&P 500 futures contract and Crude Oil futures, our most favored assets for day trade.
NLT Timeless Day Trading Chart
In the above chart, we highlighted four potential trade situations:
- The first two trade indications occurred in what we call an NLT Purple Zone (indication of directional price ambiguity), and we do not trade as long as zones of price ambiguity hold.
- In Situation-3, the NLT Purple Zone ended in a long signal: Buy > $4,789. The target for the trade was at the dot of the chart and the stop at the bottom of the indication candle.
- Situation-4 offered a short opportunity at a strong signal, NLT PowerTower Down, Sell < $4787.50, combined with an NLT Breakout signal. Knowing from the NLT Dashboard where to enter, we placed a sell-stop order, which did not immediately fill but continued the price move and came to target (dot on the chart).
Our trading decisions come from system-defined situations that repetitively happen multiple times in a trading day, offering you the chance to participate in directional price moves.
NLT Day Trading Chart Example
From the left to the right, we highlighted three trade potentials:
- Situation-1: Long opportunity, expressed by two buy signals. The upward price move is trailable by the red line of the blue frame that follows the price momentum.
- Situation-2 did not lead to a trade because a black dashed line cut the potential price movement to target short, and we spared the trade.
- Situation-3: A short trade with a bracket order developed, came to target, and produced $337.50 per contract.
With the help of our systems, traders act at crucial price-turning points, so you do not need to qualify if you trade the momentum, trend, or scalp, making informed decisions in the dynamic world of day trading.
What sets NeverLossTrading apart is its commitment to hands-on learning. Practical examples and case studies walk students through real-life day trading scenarios, ensuring that theoretical knowledge is translated into actionable strategies.
contact@NeverLossTrading.com Subj.: Day Trading Demo
NLT Day Trading Example
Could you act on a chart where it says buy or sell, with the condition not to enter the same directional trade at the exit level?
Yes, our systems have rules to learn and follow, but they are learnable: We love quantitative decision-making instead of letting emotions and discretionary decisions dominate.
Our charts are from various trading days to give you insights into our world of day trading and decision-making, and we are happy to share more in an online meeting.
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Our Offer
We help our students simplify technical analysis by providing a holistic approach that combines chart patterns, trend analysis, and market indicators. Traders are equipped with practical tools and methodologies to identify high-probability trade setups, helping them make informed decisions based on market trends and price action.
Executing trades at the right time and price can be challenging, especially in fast-moving markets. NeverLossTrading offers techniques for precise trade entries and exits, allowing traders to capture optimal returns. With its focus on high-probability setups and systematic approach, NeverLossTrading helps traders improve their trade execution and timing, maximizing their profit potential.
Trading challenges are an inherent part of the financial markets, but with the solutions offered by NeverLossTrading, traders can overcome these hurdles and thrive in their trading endeavors. By addressing emotional biases, providing effective risk management techniques, simplifying technical analysis, optimizing trade execution, and fostering continuous learning, NeverLossTrading equips traders with the tools and knowledge needed for success. Embrace the solutions provided by NeverLossTrading and embark on a journey toward consistent profitability and trading excellence.
NLT Day Trading Example
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. Hence, take trading seriously, build the skills, and acquire the tools needed.
contact@NeverLossTrading.com Subj.: Consultation
Thomas Barmann (inventor and founder of NeverLossTrading)
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