The missing link to my trading - how about yours?

You’ve probably heard that over 90% of all traders don’t make it. They either blow up their accounts or quit in frustration, wondering what happened and why their results were so disappointing. Many will lead you to believe that it was poor execution or lack of a quality trading plan. No doubt these two factors can indeed turn an account upside down.  But many traders still fail even with a great technique, great execution and a great trading plan. It’s sad, but true and unfortunately many trading educators are afraid to talk about this.

But why?  How could this possible?

The answer: unrealistic expectations. I speak from experience. After spending about $20,000 and 15 months of enormous effort to learn everything there was to know about a proven, conservative option trading strategy from a highly acclaimed trading mentor, I called it quits. And this was after I made a substantial profit in my first year of live trading. Unfortunately, I gave back almost all of these profits in about 3 months of my second year and worse, I did not know how to avoid this happening again.

The reason: I did not know the probability of success on a given trade or how many consecutive losses to expect while trading this strategy. Therefore, I did not know how much of my account to risk per trade in order to achieve my goals and avoid exceeding my maximum drawdown.  Without this information, I was doomed and I knew it.  I would never be successful without having historical probabilities to guide my expectations, trade execution and trading plan.  A few months later, my gap trading career was born and a few years later, MasterTheGap.com. 

Since we started providing daily gap trade probabilities about a year ago, hundreds of traders from all over the world have thanked us.  Many are achieving new milestones and financial goals that they thought were unattainable. While having daily probabilities is a tremendous advantage, it is not enough. Folks ask me time and time again, “how much capital do I need?”  “How much should I risk per trade?”  “How much could I make?” And each time, I can only answer, “it depends.” It depends on a number of highly inter-related variables that are very personal and unique to each individual and his/her financial goals. 

Previously, the only way to test and balance the impact of personal elements such as account size, profit goals, drawdown tolerance, consecutive loss tolerance, etc. was to create your own complete trading system – a project too intense, time-consuming, and expensive for most traders and active investors.

Today there is another option. I am thrilled to announce the launch of “The MTG Wizard” – a straight-forward, robust, cost-effective modeling and planning tool that helps traders and investors create realistic trading plans based upon account size, goals, trading strategy, and risk-tolerance. Whether you are MTG member, gap trader, or neither, this tool can help you. 

As Fred from California, a long time member and trader for 20+ years told us, “it’s totally the coolest thing I've seen in the trading world since TradeStation came out in the 80's.”  His words, not mine, but it does capture the spirit of exactly how important I believe the MTG Wizard is, or at least should be, to most traders.

Next Wednesday, January 27^th we will be conducting a 2 hour training webinar, that will be recorded for those of you that can not attend. To learn more about The Wizard and this webinar and to see a sneak-peak 8 minute video, go to: www.masterthegap.com/thewizard

A few special notes:

• The Wizard can be used for any trading setup, not just gaps. It also works for futures, ETFs, or stocks.
• Purchase entitles you to all future upgrades and enhancements at no additional charge.
• Purchase by Tuesday, January 26^th and you will receive a special introductory $50 discount. It will not be offered again, so don’t ask.

Thank you for your interest.  If you have any specific questions about the MTG Wizard, feel free to post a question here or email Coach Mock at tim @ masterthegap dot com

Carpe Diem!

Comments

[trading for a living]

I really like this blog post, it has some great info. Thank you and keep up good work.

[jason]

hi scott,

does your gap strategy work on a basket of stocks?, disablling any news stocks prior to the day?, most stocks will follow the main cash market sp and dow so it seems overall you would be too correlated for this to work over a basket of stocks and no point, may as well just do it on one or two fuutres markets but my thinking was to divestify and also to increase frequency of trades, hence increasing turnover.

Another quick question is have you ever considered using fair value of the futures before opening to gauge where stocks should open?, to get a slight better entry and edge overall?

kind regards,

jason

[Gap Guy]

Yes, the opening gap zone is a useful technique for evaluating and trading stock gaps. As is using the indices to help guide your decision. But as you indicate, what's the point? The indices - especially the futures - are clean and efficient for trading gaps and provide easy, cost-effective leverage.

To hedge, I and some folks that follow me, will sometimes hedge by trading the opening gap in mutliple indices e.g. S&P 500 and Russell 2000 or the Nasdaq 100 or even the Dow, simultaneously.

Since I don't trade gaps in stocks, I don't worry about estimating where they are going to open. Plus many stocks have early trading and most brokers will show this pricing. If not, then suggest you identify the correlation of your stock with one of the indices and then estimate the size of the gap in your stock by seeing where the index is poised to open (in terms of percentage). That said, you should adjust you expectations based on Fair Value which is basically just the adjustment for where the futures markets closed as of 1615 et and the cash markets (i.e. NYSE) closed at 1600 pm ET.

Good luck,
Scott