10 Minute Read

Tackle Today: Push the edge, find the edge

February 20, 2020

By | No Comments

Tackle Today: Push the edge, find the edge (Photo by Mike Suarez C. on Unsplash)

≈ The essence of money management. ≈

The Law of Large Numbers states that the average of the results obtained from a large number of trials should be close to the expected value, becoming even closer as more trials are performed, i.e., as the sample size grows, the mean will get closer to the expected value of the whole population.

The classic approach to explain this probability theory is using the coin flipping example. You got a 50% chance of either get heads or tails. The more you toss the coin, the closer you get to the 50% expected value. The first toss might give you heads. The second one too. And the third. But as you keep trying, say 10,000 times, you will get 4,990 heads, and, therefore, 49.90%.

Long-term consistency is the key.

Now, replace the coin flipping with trading. You enter a position that has a 90% POP (0.10 Delta ≈ 10% Prob. ITM). You get the point: the more you trade, the more the mean of your sample size will get closer to the expected value of the whole population (90% POP). You might lose the first, the second and the third rounds. That doesn’t change the fact that the trade has a 90% POP. You can keep trading as long as you don’t lose your shirt during the first rounds.

That is the essence of money management.

If you are pushing the edge, eventually you find the edge.

Chart of the Day

How SARS Impacted Global Economies

Infographic: How SARS Impacted Global Economies | Statista

This chart shows the estimated one-year impact of SARS on real GDP in selected countries/territories.

(Source: Statista)

Video of the day

Free Solo

If you are pushing the edge, eventually you find the edge.

Rookie Corner

System Synergy VI

This week in the blog we are talking about part 2 of the system build. From the image above if you want to make it to the top of the pyramid you have to have a solid base underneath and as Qbert has taught us you need to be fleet of foot. This is also true in trading systems, you need a good base and you need to be able to adjust to get the maximum success from your system. That is where part 2 comes in, we need to decide what markets will be used for the system and what processes we need to put in place to make sure that we can execute the system in a manner that is consistent with successful principles.

Traders Lounge 11 PM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

Halftime Report 12:30 PM 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.

Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Leave a Reply

Chart Modal

Tackle Trading