EVERY single stock trading strategy falls into 3 categories:
Breakout - stock breaks out of a range
Continuation - stock resumes a move after a post-breakout pullback
Reversal - stock reverses due to overextension
Which of the 3 has the highest win rate?
by the way here's a visual representation of each, for my fellow "iM a viSuAL lEaRnEr" motherfuckers.
Answer Time !!
Based on all the research done on Technical analysis in the last few decades (also confirmed by my own data tracking on LFs and LCs), the correct answer is C.
Reversal strategies have by far the highest win rate out of the 3, but at the expense of risk/reward.
But as mentioned several times before, the lower RR doesnt really matter as long as the win rate is high enough . All that matters is the "Trading Expectancy" (high win rate and low RR yields the same expectancy as low winrate & high RR). So it's all up to personal preference.
The reason reversal strategies have such a high win rate is simply due to profit taking once a stock gets too overextended (forces mean reversion).
The RR is low is b/c u have to scale into reversal setups (cant go in full size all at once), which widens ur risk & hurts the RR.
The setups with the lowest winrate are Breakouts (due to fakeouts), BUT they make up for it by yielding the highest risk/reward out of the 3 strategies. Meaning when they work, they work BIGLY
Continuation setups fall right in the middle of the 3 as far as winrate & risk/reward.
So conclusion, all 3 strategies have their pros & cons. Focus on the ones that align better with ur personality & profile.
If u are impatient, love action & cant stand being wrong, trade reversals.
If u dont mind stopping out a few times to nail the BIG move, trade breakouts
If u want a mixture of both, trade Continuations.
Either way, if u're struggling with consistency, master ONE strategy first. I say it time and time again but it bares repeating. Dont trade all 3 unless u've mastered at LEAST one of them. FOCUS & specialize.
The 1st step to improve your trading is to stop lying to yourself. You don't suck at trading because of bears/pumpers/ marketmakers etc. You stuck at trading because of:
We live in a society where at the FIRST sign of failure/struggle, people's FIRST reaction is to blame someone or something else. The most important skill to master in this day & age in order to be good at ANYTHING, is the ability to shut the f**k up and look in the mirror.
if u are fat it's because u eat more than u move. PERIOD.
u are frail b/c u dont lift weights consistently. PERIOD.
u are dumb AF b/c u dont read enough. PERIOD.
u struggle at trading b/c SOMETHING is wrong with YOUR process.
🐻This is where every shortseller tries to decide if he should add to winner (on the bounce into trendline) , take profits, or start shitting his pants.
🐂This is where every Bull bagholder decides if he should sell for small loss or hope for squeeze
@__shaka_zulu__ This is some bullshit. That turnover is gonna cost us this game. how the fuck do you fumble on 1st and goal with THREE fucking yards to go
@__shaka_zulu__ 🏈 $LIONSQ is squeezing the fuck out of us 😩. hoping for the late day fade setup to kick in in the final quarter
To maximize accuracy (win rate), you must wait for confirmation.
Confirmation means that you're letting the smart money move the trade in your favor (or stop the momentum) BEFORE u commit size.
This automatically means that u'll have to enter a bit "late". cant have both
To maximize profits (high reward) aka capture the majority of the move's range, you have to get in BEFORE the move starts (when no one wants the stock).
This automatically means that u must risk getting stopped out early by MMs or being wrong on ur thesis (since no confirmation)
High Spatial IQ will help you learn trading faster ONLY because it'll help you recognize patterns faster. But that's about it. Once you learn how to trade, high spatial IQ is useless.
High overall IQ can actually buttfuck u in trading b/c:
1) it'll make u overcomplicate trading
2) the ego that comes with high IQ will make it harder for u to manage risk, since smart ppl hate admitting that they're wrong. So they refuse to stop out or they revenge trade a lot
Ive taught many ppl how to trade, and ironically the smartest tended to struggle the most, because they were just too stubborn to keep things simple or stick to the plan. Meanwhile the low IQ motherfuckers tended to perform better b/c they just executed. No overanalyzing BS