I'm loving some of these big swings right now! One of the key elements of moving into a higher level of profitability is learning to be adaptable to market conditions. We've been seeing some pretty good momentum and large swings lately so it makes sense to adapt our targets a bit and take advantage when the opportunity is there. Yesterday's trading has some similar moves as you can see from the post below:
Maintaining a strong reward to risk ratio is something I focus on a lot when it comes to working with new and developing traders as it relieves a lot of the emotional pressure that comes from needing to maintain a high win percentage on your trades to be profitable. You don't need to win 80 or 90% of the time for your methodology to have a very strong positive expectancy.
As you can see from the prior couple of days, my wins are typically substantially larger than my losses (2:1 reward to risk or more) which means I can still be profitable even if winning around 1 in 3 trades. Since we generally aim for win rates in excess of 60% it creates a substantial trading edge we can exploit week after week.
With this day it puts me at 14 points profit for the week with the 6.5 points from today and the 7.5 points from yesterday. This is a pretty good start to a normal week and already has me within the target I set for Samurai Trading Academy students of 10-15 points per week. To be fair, it's unlikely that a novice trader may need a bit longer than two days to achieve that result as it's usually our aim over a complete five day trading week, but with experience veteran traders can often achieve those results with substantially less screen time in good trading conditions.
Considering the strong start to the week it will be interesting to see how it wraps up over the next couple of days. Tomorrow is the day before the Non-Farm Employment report which is a key monthly release so often the market gets into a bit of a "wait and see" mindset the day before. Friday could see a significant increase in volatility and volumes with the report releasing before the New York Stock Exchange opens at 9:30AM EST but with a bit of luck along with patience and discipline it should bring some quality opportunities for us to trade.