Wednesday, November 12, 2008

SSO Provides Low Risk Entry

While the "edge" or probability for the trade may be 50 percent or less (accumulation pattern is not what it was a week ago), SSO does provide a low risk entry point that can be easily managed with a stop under the recent lows.

I am willing to take low risk setups even if the probability for success is not what I like, especially when the reward is big. For example, if I entered with 500 shares, the most I would lose is $1000. My potential gain is $7000-10000 if the intial target is hit.

I could lose on this type of trade 6 times in a row and still make money if I hit on the 7th try. Thus, I'd only neeed to be right about 15 percent of the time to make it in the green.

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