Here's the thing; anyone can learn how to trade. They can learn how to read charts, risk-reward ratios, trading strategies, rules of discipline and so on.

However, in the end there is one thing that determines the success rate of active traders...

Being in a position to NOT put on trades

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I know what you are thinking, WTF? What is that supposed to mean?

Well, I will give you an example, but first let me describe why it is vital.

When the Edge is High

Trading is all about probabilities, thus the stronger the trend or environment of consecutive occurrences the better. However, these type of trades do not come every single day or even every week.

Think about a blackjack player who sits at the table keeping a count of the cards, either playing very small or not playing at all until the count goes drastically in his favor.

Then Wham! He bet's big and gets paid on the one hand (trade) he took out of the 100 that passed by.

Do you have the time, money or patience for that?

Most people don't. This doesn't necessarily mean money can't be made actively trading. However, if you are in a position to only trade when the "count" is highly in your favor then your success rate will go through the roof!

An Example

For anyone who follows the US equity markets even just a little. You likely know that volatility has been dying for almost six years now. The market has basically done a slow grind higher, intraday swings are not exorbitantly large and the VIX trends lower and lower.

Basically the volatility index (VIX) is somewhat dead at this point.

You know what does happen once in a blue moon though, we get a shot of worry and the VIX spikes higher.

The result of this almost every single time is that the VIX comes right back down within a few days or so.

Time to Trade

When the VIX spiked last week as the markets had a few big down days, it was time to put on a trade. It was the first time in months I traded in the US markets, mainly cause I focus on crypto now and because I don't NEED to trade.

However, I will when I see the Captain Obvious trade!

The Trade

I like to use the ProShares Short VIX ETF (SVXY) and trade the options on it. This ETF is a leveraged short of the VIX. It goes up when the VIX goes down and the moves are usually hard and fast so when it snaps back after a big move, it snaps back hard.

I have made this trade several times before and the success rate has been through the roof, but again the opportunity doesn't come all the time, sometimes once a month and sometimes not for several months.

Looking at the chart

You see today's green candle preceded by Monday's. Then you see the big red doji candle on Friday after the aggressive spike down the prior two days.

At a minimum I wagered that SVXY would snap back to that previous support around 75 so decided to play it conservative and purchase a 74/77 Call Spread with August expiration, which is this Friday.

The one week time frame did not concern me because when it snaps back, like I said it usually happens within a few days.

Exiting the Trade

As you can see on the chart it not only pushed backed to 75, it skyrocket to 80. Thus, I closed the trade and took the 100% plus profit on a three day trade.

Conclusion

I'm not showing this example to brag, trust me I have my share of losers (it's usually when I don't need to trade but want too).

I'm showing you this as an example that high probability opportunities are out there. So long as you wait for them!

The Problem is....

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Best Regards,

Disclaimer: All content within is my opinion and for educational purpose.