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We don't predict the future. Anybody that says they can are just lying to you. We don't have to know the inside and out of the companies to make money on their movements. We pick trades based on numerical probabilities and sound understanding of how markets really work.

Probabilities

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We provide you actual probabilities of a stock reaching a certain winning or losing level, how much the payout should be and have historical data to back our trades.

We often hear that "past performance is not a predictor of future results". While most of the time that is true, we have found that much of the time the past performance of certain strategies of certain asset classes can help us stack the odds in our favor. The trick is to know how to measure past performance in a way that will manifest trades that will help us be more profitable.

Let's be clear: "probable" is not the same as "guaranteed". Sometimes we lose money, but we do so in a way that, in the long run, makes money and grows our accounts.


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Risk Management

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You must take risks to make money. Managing those risks is key to survival in the markets.

Many people trade without thinking about how much money they might lose because they only focus on how great it will be to spend all of the money they are going to make. Or, once the trade starts going against them they freeze up, not wanting to be "wrong", or hoping that someday they will at least come back to even, when in reality it only gets worse. This is not trading. This is gambling. Real traders have a plan on how to get in, how to manage the trade, and how to get out.

Along with our probabilities we give you tips on how to take trades with limited risk and big reward. We also help you determine which kind of trader best matches your personality. You may think "I just want to make money, not please my psychology." Yes, making money is important, but to be a true stock operator or manager of risk, you need to know which styles of risk-taking best suit you otherwise your performance will go down the drain.

We have position sizing tools that can help you right-size your trades so you can remain "in the game" if you run into a drawdown or losing streak. Mastering this aspect of trading is what separates the pros from the amateurs. We also teach you how to know where your exits are, both for profits and losses, and help you size your positions according to the potential risk involved in the trade.

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Diversification

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"Diversification is the only free lunch in financial markets" - Harry Markowitz, 1952

This is one of the best truths I've ever heard about financial investing, but many traders ignore it because they focus on maybe 1 or a few markets, trying to spot those intra-day buy and sell points by watching charts all day on 4-8 monitors. This may work for some people, but it doesn't have to be that hard.

We trade across four dimensions of diversification:

  1. Asset Type - It's good to allocate capital across company stocks, ETF, commodities, interest rate instruments, and more. You want to be exposed to as many different types of underlying asset types as possible to avoid correlation risk.
  2. Industry and Sector - Owning stocks across different sectors prevents you from being too heavily overweighted in stocks in the same industry or field.
  3. Direction (Long vs. Short)- Your shorts won't work as well in bull markets, and your longs won't work as well in bear markets, but they still work. If the market crashes or rips higher you are less likely to feel absolute pain in your portfolio if you have some longs and shorts in your portfolio to hedge against each other. This long/short approach is a common practice employed by hedge funds. This also helps reduce correlation risk.
  4. Trading Strategy - Different trading strategies often work best in certain types of markets. When the market changes, that strategy may not work well for a while, or ever again. Trading multiple systems at a time can keep your portfolio performing during market shifts. While one strategy is not performing well, others will pick up the slack.

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