A typical trading trap is getting lost in the foliage.
You're only seeing the trees and missing the forest. All that clutter blinds you to the enormous opportunity right in front of you—the trade that makes your month or even your quarter. Let's fix that…
Now, picture Warren Buffet as an intraday trader.
Two crucial need-to-know facts about Buffet are:
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He doesn't bet uniformly.
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He's always ready to go big on asymmetric setups.
Asymmetric setups: where the reward is massively skewed in your favour, and the trade not working is unlikely.
Now, imagine Buffett trading in just one market—the same one I trade.
Given his principle of asymmetric setups, he’d choose this market for a critical feature: a built-in price floor.
Let me explain.
Without going into the fundamentals, at times, price becomes unhinged from reality.
In the 'near term,' the odds of the market going below the current floor are so low that it produces a trade so massively skewed to winning versus losing, savvy traders jump at it, going all-in to use a poker analogy.
From Monday
Above you see trading begins with short-term scalping—winning and losing equally.
Finally, the market trades at a level triggering the asymmetric long opportunity.
From Wednesday
Due to the EOM theme, the opportunity was greater.
Caveat
This is an advanced strategy requiring multiple points of evidence. Without all of the necessary variables trades which look similar on a chart will punish you relentlessly.
In summary
A market offering a built-in price floor and non-uniform betting is a powerful combination to achieve outsized payouts.
Not to be confused with 'bottom picking', these trades are only taken when the necessary multiple points of evidence are present.
Forex and derivatives trading is a highly competitive and often extremely fast-paced environment. It only rewards individuals who attain the required level of skill and expertise to compete. Past performance is not indicative of future results. There is a substantial risk of loss to unskilled and inexperienced players. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent
Editors’ Picks
EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support
The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.
GBP/USD slips heading into the Thursday trading window
The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions.
USD/JPY strengthens above 153.00 despite stronger US jobs data
The USD/JPY pair attracts some sellers to around 153.20 during the early Asian session on Thursday. The Japanese Yen strengthens against the US Dollar in the aftermath of Prime Minister Sanae Takaichi's landslide election victory. The attention will shift to the US Consumer Price Index inflation report, which is due later on Friday.
Editors’ Picks
AUD/USD bulls pause amid post-NFP USD rebound
AUD/USD is trading with a mild negative bias during the Asian session on Thursday, below a three-year high set the previous day. The US Dollar looks to build on Wednesday's upbeat US NFP-inspired bounce from an over one-week low, acting as a headwind for spot prices. However, the divergent Fed-RBA expectations, along with the underlying bullish sentiment, should help limit any meaningful corrective fall for the risk-sensitive Aussie.
USD/JPY strengthens above 153.00 despite stronger US jobs data
The USD/JPY pair attracts some sellers to around 153.20 during the early Asian session on Thursday. The Japanese Yen strengthens against the US Dollar in the aftermath of Prime Minister Sanae Takaichi's landslide election victory. The attention will shift to the US Consumer Price Index inflation report, which is due later on Friday.
Gold posts modest gains above $5,050 as US-Iran tensions persist despite strong labor data
Gold price trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index inflation report will take center stage later on Friday.
Bitcoin holds steady despite strong US labour market
Bitcoin briefly bounced from $66,000 to above $68,000 but slightly reversed those gains following Wednesday's US January jobs report. The top crypto is hovering around $67,000, down 2% over the past 24 hours as of writing on Wednesday.
The market trades the path not the past
The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.
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