≈ The more, the better. ≈
Asymmetry is, in its simplest form, the lack of symmetry.
Some professions require symmetry, either structural or aesthetical. Others not only can live without symmetry but are in constant search of a good one.
Like us, traders.
How much can a stock fall? –100% should be the max level, right? There’s no such thing as a negative stock price, so zero should be the ultimate disgrace. Even in the options world, if you are long an option position, how much can you lose? Only –100%, right?
On the other hand, how much can you make? +200%? +330%? +1,000%?
That’s asymmetry and we loves it. We needs it. Myyy prrreciousss.
“But losing –100% is too much, don’t you think? It can break you!”, you ponder.
Yes, we understand your point. Losing –100% of anything sounds too much BUT how much is –100%? If –100% is your entire account, yes, my friend, you’re done. But what if –100% equals –$150 in a $20,000 account?
That’s more like it.
Because we are dealing with money, we must not approach asymmetries carelessly. We are not gamblers. We are professionals. A religious approach is not only suitable but desirable in our case.
Limit your –100% and compound your gains over decades. Handle winners and losers with care. Leave your ego outside the door together with fear, greed, and hope. They don’t serve you.
That’s the fertile soil the asymmetry needs to work its magic.
Chart of the Day
All Apple (AAPL)
This is a monthly chart of Apple (AAPL) containing all candles related to this stock. The first one dates back to December 1st, 1980. The open: $0.51, the close: $0.61. There is no such thing as too big to fail. Empires come and go, currencies come and go, companies come and go. If they cannot reinvent themselves anymore and people become fed up with pink iPhones and Jonathan Ive explaining yet another innovative concept, the company can file for bankruptcy before you know it. Prices will go to zero, pulverizing your investment. That’s ok, the most you can lose is –100%. The floor is the limit.
Video of the Day
Why and How To Look For Relative Strength
Coach T from Tackle Trading teaches you a simple way to look for relative strength when analyzing the Market and Companies like AAPL.
Today’s Lineup
TALES OF A TECHNICIAN
Wrangling a Naughty Cat
Today’s tale details how I clinched victory from the jaws of defeat. Within you will also learn of how I employed the scaling-in technique with a credit spread.
Coaches Lounge 11am EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show 8:30PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30pm EST to discuss the markets and help you prepare for the week.
Halftime Report 12:30pm EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Market Recap 4:30pm EST
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.
