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Big bets lead to big rewards

Thursday, August 21, 2014 10:37

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Many times you will hear traders making big multi million profit in a year or less. One of the key ingredient in those explosive returns is size of bets. explosive returns require very concentrated bets. Along with that use of margin play an important role in those explosive returns.

When you hear explosive returns story you hear of like Dan Zanger , Jim Roppel, Jesse Stine, Nicolas Darvas, Gil Morales, Chris Katcher and others always investigate what kind of bet sizes they used. You will see that during those periods they used big bet sizes. Some of them risked entire account plus margin on single trades.

That is a high risk high reward approach. If you survive and make big money you can tell stories, if you do not survive no one hears about you.

not everyone can and should do big bet size. You need lot of conviction to do big bets. For a trader just starting out big bet sizes might be end of the trading adventure. But once you have sufficient experience periodically betting big on select few high quality setups is the key to enhancing returns.

If you see all the really extremely successful traders who have made big billion dollar or multi million dollar fortune trading , they built their fortune on making one or two big bets.

George Soros bet everything on British Pound short and made 2 billion on the trade. Without that one big trade he would not have possibly become a billionaire. Paul Tudor Jones became “the Paul Tudor Jones” by betting the farm on likelihood of market crash in 1987. His bet made him 100 million in few days. Stanley Druckenmiller bet the farm on German Mark and it made him a billion dollar profit in few months. Jesse Livermore bet the farm on likely market crash in 1929 and made 100 million (which will be equivalent of several billion now)

This you will find as recurring theme in those who made really big money. few concentrated bets on high conviction trade.

While swing trading makes us money and keeps us in game once in a while when high conviction Episodic Pivots kind trade show up betting big can make the big difference. If a high conviction trade shows up I am willing to bet big on them.

If you want big explosive returns study bet sizing of those who made explosive returns in short time period.

Source: http://stockbee.blogspot.com/2014/08/big-bets-lead-to-big-rewards.html

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Comments

Total 1 comment

Popo

You are so right. Once or twice a year short funded commodity option traders can get that opportunity but on a smaller scale, of course.

Coffee was the ‘home run’ option trade so far this year where 130 strike price CALL options in the July contract for $1900 each netted $24,000 each in three months.

see the chart here if you like:

http://www.vtuniversity.com

Aug 21, 2014, 12:32 pm 0 Reply

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