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Control Trading Outcomes
How can we optimize monthly performance? The answer lies in managing the outcomes of individual trades. Imagine we have four stock trades, each with a potential outcome of Gain, Break Even, or Loss. Among these four trades, there are eight possible favorable outcomes and four losing outcomes (counting break-even as favorable). The strategy is to cover the range of possible outcomes with the odds in your favor, aiming for a gain or at least a break-even result. Stocksaurus identifies trading opportunities where the odds are in your favor, focusing on accumulating consistent small gains rather than chasing rare big wins.
Achieve Consistent Modest Gains
Many traders target >20% on a single position, often leading to stagnation or losses. Time becomes the pivotal factor: the longer you hold, the lower your average monthly return. If time alone guaranteed such gains, buy-and-hold would suffice. Stocksaurus favors high-probability moves (<10% in ~10 days) for steady compounding. A portfolio averaging 0.5% per trading day could double in a year; disciplined swing trading can realistically exceed 25% annually.
Balance the Risk
Divide capital into equal parts so one loss doesn’t dominate portfolio results.
For $20,000: Consider four equal segments for up to four concurrent trades.
For $50,000+: Use 5–10 segments if you can monitor them.
Sector diversification: Spread exposure across sectors with risk controls to buffer market/sector shocks.Compound Growth
Reinvest cash from each profitable sale into the next trade. Compounding reinvests gains so each win powers the next, accelerating growth with patience and discipline.
Key Order Terms
Stop Price: Activates the order…
Limit Price: Sets the maximum purchase price or minimum sell price if a sell order.Common Swing Trade Order Types
Buy-Stop Limit Order
(Combines stop and limit orders for entry)
• Stop Price: Triggers conversion to a limit order when market reaches/exceeds it.
• Limit Price: Max purchase price after activation; avoids overpaying in volatility.Sell-Stop Limit Order
(Combines stop and limit orders for exit)
• Stop Price: Triggers when market drops to/through it - but NOT over it!
• Limit Price: Minimum acceptable sale price after stop price is reached.
• Break-Even Price: Where total costs equal total proceeds (varies by instrument/fees).
• When to Move Stop-Loss to Break-Even: After reaching a defined profit threshold; avoid doing it so early that normal noise exits you prematurely.
The information provided on this website serves exclusively for educational and informational purposes and should not be considered financial advice.
We strongly advise engaging a certified financial advisor to obtain advice tailored to your unique financial circumstances.
Investing in stocks carries inherent risks, including the potential loss of the invested capital.
The content shared on this website is not meant to be the sole foundation for any investment decisions, nor is it to be interpreted as specific advice suited to any individual investor's requirements. Remember, past performance does not guarantee future results.