Visualizing Success

Winning Picks (or "To Catch a Shark") is a strategy game I've created where you buy options using a process and extract profits using a plan. Before diving further into those details, I find it very helpful to show members what it takes to breakeven in this game.

Keep in mind, Winning Picks is a probability game where you'll likely have more losing trades than winners. This means that when you win, you need to win more than when you lose. More importantly, you should be concerned about the math working over many trades as opposed to any one trade. This is what it means to shift the odds in your favor.

What I am showing you here are charts that breakeven over 10 trading ideas. The assumptions are that you invest the same $ amount in each trading idea. For example, if you use $1, then you will invest $1 ten times.  

If the trading idea makes 100% and you invested $1, then your profit would be $1. If the trading idea makes 300% and you invested $1, then your profit would be $3.00. 

To calculate your total return across all 10 trades, you would simply add all the profits and losses, then divide by $10.00 (or 10 trades x $1 per trade).

These trades produce $0 profits or losses over 10 trades. Thus, the total return is 0%.

Absorb these charts.

Etch them in your memory.

Anything better than these charts and you win!

That is leverage at work. The charts should illustrate that you could still break even winning less often than losing, only if you win more when you win.

It also illustrates how 1 big winner makes it very difficult to lose over 10 trades with proper stops.