We have continually discussed this, but will never stop driving this point home.
Watch and study winning Poker players. They always calculate the odds of making their hand before making a bet. If there is too much risk relative to the size of the pot, they fold - you have to play the same way.
Using Alchymist, you can ensure you know the odds via these tools:
- Returns by month - The most detailed seasonal analysis you will find. We have every trading day of every month going back decades. Be mindful of seasonal trends for both opportunity, and also to avoid high risk/ low reward bets.
- Probability table - Here you can measure the likelihood of a trending move continuing. If you see a Future has has made a trending move that places it in the 80th percentile over a given time frame, you know you are closer to the end than the beginning. Be vigilant for signs of the move reversing - that would not be a time to get greedy with continuation bets. The second way to use them is to understand probabilities for hedging and profit capture purposes. We focus on probabilities 20 days out, understanding what the 70th percentile movement is, and therefore what we can expect, once we enter a trade. If you are trading Crude, and you know that 20days out, there is a 70% probability that price will advance $2.24 vs decline $(2.00) then you know what type of drawdown that you will likely face. This needs to enter your calculus as you decide how many contracts you will trade, as well as where you will place your bets.
- 3PC Proprietary Analytics - Whether it is COT ratings, or other technical setups, we will let you know where the highest odds bets are presenting themselves.
Do not forget that you can't make the mistake of confusing class probability vs case probability. Meaning even if you have 70% odds in your favor, your very next bet still carries only a 50/50 chance of success. i.e. you either make, or you miss.
Therefore do not assign any greater emotional value into 1 bet vs another. You have to be like a consistent free throw shooter in basketball. Simply go through your routine the same way, each and every time, and over time you will achieve your average rate.