How to increase profits while decreasing your risk (Experienced Trader)

would you like to learn the biggest Epiphany a number one prop Trader in back-to-back years had in his trading career in this video Lance brightstein shares this discovery that catapulted him to a lead Trader I'm Mike Bella Fury and we're one of the top proprietary trading firms located in New York City and proud to have developed numerous seven and even eight figure per year Traders we hope you agree this is the top YouTube channel to help you grow your trading account [Music] hey everyone today I'm going to present to you one of my most popular concepts of all time and this concept will help you increase profits while decreasing risk and it's generally geared toward the experienced Trader I'm Lance Brightside and you can follow me at the one lance be on Twitter for more trading Concepts and other great trading advice so in this video we're essentially breaking the Paradox what we know is risk reward and everything like that I'm going to share with you one of the biggest epiphanies of my trading career I was elevating myself towards Elite level capitulation trading but was just taking on too much heat trading such big size and often drawing down and stressing myself out I ask myself how can I stress less even if it meant making less little did I know I was about to stumble upon a solution that would allow me to stress less while risking less but still counter-intuitively making more I conceptually understood that at different moments in time the same prices can have different expected values but then I finally connected the dots that if I if applied properly then I can add actually get more size in those moments for Less risk and best of all less stress even better this concept doesn't apply just to capitulations but to all strategies and styles of trading what would your trading look like if you could take less heat draw down less stress less and how could that transform your career over time I think it would make a huge difference Almost Famous so this is really the image that really helped my uh my fintwick career take off and we're going to Deep dive into it it's what I called the right side of the V and so in doing this I'm going to explain the concept in depth share some examples of it in action as well as clarify one of the biggest misconceptions about the concept it's incredibly had over 400 000 views and here we're going to break it down in depth essentially the same price does not equal same expected value this is one of the biggest Trader fallacies of all time so many Traders assume that just because the price might be the same and you can still get that price in different moments in time and in a different pattern that is the same expected value this this actually is massive implications to how you trade and approach stock moves one of the most important is for meaner version strategies and the decision to fight the trend versus waiting for the turn as I coined the phrase the decision to wait for the turn is often the rights as I called is the right side of the V and is going to be often the right decision as I'll explain further as always I'm going to rely on a trusty poker analogy I want to really simplify this concept for you how can the same price of different expected value at different moments in time really it's the same way that win percentage can change for poker hands as the hand progresses have you ever seen those seen poker on ESPN and you see how somebody can start with a hand that might have a 40 chance of winning but then that same hand can develop into an 80 or even 100 chance of winning hand as the Flop turning River progresses trading is no different the odds and expected value are constantly changing bar by bar as the trade develops and more information is gained and when we take that concept and apply it this can have really really big effects so let's talk about what I call the left side of the V or a stock that's trending lower and still hasn't turned so these assumptions are generous but what we're going to assume is that if this bounces and goes back to its normal price you might be able to make 50 cents right but your risk we're going to give 50 cents as well and this is even being generous because the reality is is when you're fighting the trend you don't necessarily have a stop and that's one of the most dangerous parts and one of the biggest benefits we're then going to talk about because you're fighting the trend we're just going to assume your win rate's 55 lose rate is 45. so this does have a very small um marginal chance of winning and positive expected value in this case um just based on these assumptions but we're really going to hammer down what happens when you get the same price after the turn once you wait for what I call the right side of the V once a turn is in two key changes occur at point B so first of all is now we have a true stop rather than just something arbitrary or or just uncapped risk because we're going to give it to the lows and the other most important part really is that our win rate actually improves because we're now going with that Trend or another way of thinking it is it was like lower and now we're going with that counter Trend as it bounces and so what I do there is it's really the same reward to risk but our probability of winning is significantly higher and what we find is a much much better expected value you always need to do the expected value math it's so so important um and what you find is that that's not even just a small marginal difference even though it's just a really not that huge change in the win rate the EV is way way way higher and what does that mean in traditional betting terms the higher EV the more size you can put on just like in poker the higher expected value have generally the more you want to bet if you are an experienced Trader that logic is no different that's why waiting for the turn allowed me to size up to risk less and stress less while making more p l so I often get asked how do you define the turn this is always going to be individualistic depending on your system but here are a few ideas that I find tend to work really really well when things are trending as in something's making a really sharp leg blower and I'm trying to find that turn one entry I might use is the break of Prior bar highs another entry is if there's if we're holding a really tight downtrend I might wait for that break or if it's a kind of bigger Trend and a looser Trend I might wait for that break of a moving average as another entry and as always yes this concept can be applied with the same logic to up moves so you would just flip it right the break of Prior bar lows the break of an uptrend or the break of a moving average going the other way um it's all the same stuff here the concepts always kind of kind of apply so now we're going to break down some real world examples and so this was a really great one and probably so far one of the one of the best trades of the year in 2023 uh and Steve Spencer is tweeting it about was tweeting it out and so this was in wal a Regional Bank stock that was getting hammered in some of the Peak Panic back in March and so this stock went from the 30s or so pre-market in a pretty straight Trend uh it went it went from 30 to about eight bucks we then put in a bottom and we get a turn and so you can see so clearly how these patterns actually pan out in real life you have a very clear Trend down it never gets broken anywhere once that trend is different and it's turned it's a very clear uptrend up and so often with these In-Place stocks which I'm going to discuss more later that's where you get these clean patterns and so yes you could have bought on the left side at 10 or 11 bucks but you wouldn't have known what your stop is right could this stock have gone to two bucks could it have gone to one Buck were you going to potentially hit out as it went lower and take a bunch of losses you know that's the hard part about trading on the left side of the V before the turn but once that Bottoms in and you see those um reversals based on prior highs or however you're going to judge it that trend line broke um that's where you want to get in and really it's just a different trade with a clean stop and better when you're eight another real world example was last year this actually happened while I was at a wedding in Mexico and so this was in crude oil and um crude oil was weak it started to um it was trending lower pre-market then pre-market we started to kind of really panic and we make a very clean leg down we we do a turn you know as again evidenced by the break of Prior bar highs for a clean little entry and we have a nice little leg that follows and so again you can always be buying on the way down and getting those same prices but you don't know what your stop is you don't know how far this is going to go you don't really put yourself in a good position when you're fighting the trend like that so I always hear some counterpoints probably the only Counterpoint that I really give a lot of creatings to and I think has some validity is the limited liquidity argument some people argue that if you really want to get a big position the most liquidity is on the way down and once the turn is in everybody's fighting for prints and you can't get the same amount of size so in some cases this is totally true and I hear you but for most Traders especially people that are younger more beginner you really want to wait for the right side of the V and find the liquidity you need I myself despite the big size I was trading I'm so often surprised that you can still get all the stock you want and even more once that turn does occur and the reality is is like when you're not taking that heat and drawing down it so often just works in your favor anyways right so like yes there's some situations in thinner stocks you might need to get someone and on the way down but like if you're an expert sometimes you can break those rules but I really don't recommend it unless you really really need that stock the other thing where I think people are messing up here is they ask but isn't this Death By A Thousand Cuts if you just take every single little turn and so this is where you're not being nuanced stuff enough what you really need to do is be applying this to In-Place stocks making huge capitulations so much of the market is noise right probably 99.9 of stock moves in the market are noise so I want to find the In-Place stocks I want to find the stocks that are making the biggest moves the biggest panics the multiple legs lower those nuances give a play Edge versus others and that's a topic that I can break down in another day but the quick answer is if you're finding yourself always Dying by a Thousand Cuts you're probably not being selective enough and not nuanced enough in the pattern I want to find the stocks that are making the really big capitulatory moves and apply this strategy there probably the biggest misconception on this tweet that I had is people think it only applies to these capitulatory reversal patterns and in the tweet I even challenged people this concept doesn't just apply to that chart pattern it applies to many where might you be making this mistake in your trading elsewhere can anyone give me examples and so I want to discuss how this concept applies to other places as well let's talk about breakouts where again the same price does not equal the same expected value if a Stock's holding tight against the resistance then we break out in point a we might have a really really great probability of breaking out and caring on further but now let's say this stock attempts to break out and we pull back into point B so often based on my data collection I found that at point B once the stock has failed to go and gain distance and it's pulled all the way back to that prior resistance level I actually find that the risk reward and the expected value on that is worse so yes you get a second chance to buy but right like there's a lot of times where I might not want to and let's say we barely bounce off that prior resistance and then we find ourselves in point C now we're making lower highs twice now we can't push off that that level and so so many people think to themselves oh nice I can get the same expected value here but it's just not true see in my mind is even worse than b b is even worse than a that doesn't mean I won't ever play B and C but I certainly if possible want to get all my size at a and have certainly less at B and C it's so so important to recognize that even though it's the same price here the expected value is not the same right you need to think in these situations where is it changing and finally another really common example is breaking news where this same price is again not the same expected value let's say some big headline comes out and you can buy it very very quickly and point a if that headline then starts to really deeply pull back and you see your prices again so many people that might have missed it in point a psychologically due to fomo and whatever else they think oh wow like I can buy it again and then much to their surprise they so often get run over but it's important to analyze and think about this really really good headlines and really good trades they go in your favor they don't pull back if they pull back it's really shallow and it's always making higher highs and higher lows so if something's pulling back to that same price or pulling back deeply I'm not saying it won't ever work but you need to recognize that the odds of success in point B are not the same as they are in point a and so often something that's having some deep pullback the risk reward isn't the same either it's the likelihood that that has some incredible move higher it's not impossible but it's a different probability Spectrum so it's so important to recognize the Givens have changed a is not the same as B right a is buying a breaking news headline on something you think is very bullish B is that same headline has now pulled back and the Market's not as excited as your expectations that is key information just like it's in the poker hand when the cards that you might have wanted have not appeared so this is really a pretty Advanced concept and some Concepts take time to internalize but it has huge implications and really takes a lot of thought to think about and reflect in your own trading if this is confusing if you're not sure how to apply it re-watch the video do some thinking and take time the human mind tends to connect and apply Concepts over time as we ruminate on them what might not make sense now might make tons of sense a month or a year year from now but it's so so integral to your success that you understand how different plays can have different expected values in different moments in time and your betting and your decision to take that trade needs to reflect that this will really elevate your trading if you can internalize this concept thank you so much for watching okay do you want to learn more actionable trading strategies like the one you just learned from Lance then watch the video the single biggest secret to profitable trading surprising appearing on your screen right now

Channel: SMB Capital

Views: 82,016

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, right side of v, lance breitstein, lance smb, lance smb capital, trading lance b, buy the dip

Id: dUE0zmPCihs

Length: 14min 21sec (861 seconds)

Published: Mon May 08 2023