The Daily Market Forecast... "asymmetry"
Monday’s Blog Results: The suggested buy at 4527 stopped out.
Today’s Trading Tip: Asymmetry
In its simplest form trading is nothing more than risking money to make money. You need to be a net winner. This will happen if your losses are kept “small” (that’s a relative word) and you have…
- More winning than losing events or
- Larger winners than losers.
Successful traders look for asymmetrical trades. These are trades where the risk is very small compared to the potential gains.
One application for asymmetry is frequently overlooked. Trade direction. Evidence shows that price tends to fall faster than it rises. Look at enough charts, measure the moves, you’ll find it’s true most of the time. Tops tend to be “round”, bottoms tend to be “V” shaped.
Given this reality, shouldn’t your exit rules for shorting be different than for going long?
Doesn’t it make sense to take quicker profit on plunges in price and give the melt-up time?
It’s rare for a trading strategy to be symmetrical and have both longs and shorts perform equally well using the same rules. Review yours and consider if you’re asymmetrical (enough).
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4623.50 stop 4629.25 (5.75 risk). Same as yesterday.
Long Level: Buy 4552.25 stop 4546.50 (5.75 risk).
Trade Well,
Mike Siewruk
P.S. Do you want to see LIVE, HOW to trade the Globex session? Join us this coming Sunday @ 5PM ET for our weekly LookBack (5) trade review. Every trade for the week is analyzed. Then we'll open the market. Click the here to register for the December 26th session.