I received the following email:

“You’re great at sports betting but really should stop with the awful trade advice. Risking 10%+ to make usually less than 1% because you don’t like taking a loss is laughable. Your swing trade managment is like betting a -1500 moneyline favorite who should be -1000. “

My response:

I can understand your skepticism regarding the swing trade method I am using. But it is not something that I have come up with on my own. Its a result of analysis of many different methods and has been back tested using many different parameters for entry and exit by persons much more competent then me.

There are many different indicators you can use rather then the rsi(2) but the ones that have back tested results all indicate this gives you the greatest return. In addition one thing that all agree on with these methods is that to place a stop on these trades significantly reduces the return overall. Its not a close decision based upon the studies.

As far as my not liking to take a loss…..believe me when i tell you this…even though i don’t enjoy a loss…its part of the process and i don’t let the fact i have a loss influence whether to exit a trade or not. My exit strategy is predetermined prior to my taking a trade.

As far as this strategy being similar to betting -1500 on a -1000 favorite….i respectfully disagree as there is no similarity at all.

Now saying all of that..these trades are not for conservative investors. And you can take a 10% loss. It is possible. But overall I am convinced that in the long run these are positive ev trades.

Consider this….the last two sets of trades have witnessed an 800 pt drop in the dow and a 370 pt drop in the dow all after we made these trades. On the first set that is now closed…we lost only 1/10 of 1%. On the second set we are off about .5 of 1% and are well positioned if we get a continuation of the reversal on friday to show a nice profit on the trades.

But there is always the possibility of a “black swan” event….which will lead us to a 10+% loss and one should be well aware of that before making these trades.

Thank you for the email…and I appreciate the criticism as it keeps me on my toes. I am always willing to debate the viability of my methods.


Showing 0 comments
  • Anonymous

    What would you say your risk/reward is on a typical swing trade? Maybe you have a +EV system that has 1% winners and 15% losers?

    I'm not hating, love your blog and that you are a no BS guy.

  • Daniel

    Hi Rick,

    Great blog, long time follower.

    I posted a comment a couple weeks ago regarding future market direction, EW theory, etc.

    A suggestion: Why not hedge your reversion to the mean strategy with spy? e.g. long xyz, short spy
    Or to be even more market/sector neutral, you could even hedge with sector etf's. It "seems" like it would be even safer to use a bit of leverage, although black swans of course happen.


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