How to Maximize Your Trading Profits with ONE Small Change

Summary

In this trading lecture, Jared Wesley discusses the concept of 'add and reduce' as a strategy to accelerate profits in trading. He emphasizes the importance of not overcomplicating the trading process and highlights the psychological aspects of trading, such as fear and greed. Wesley uses various examples to illustrate how adding to a winning position can increase profits without increasing risk, provided the trade setup is strong and the market is trending. He also cautions against the pitfalls of tight stop losses and the need for consistency in applying trading strategies. The lecture aims to help traders become better by understanding and implementing the add and reduce technique effectively.

Takeaways

• 📈 Embrace simplicity in trading; many traders overcomplicate the process.
• 🔍 Focus on your strengths and minimize weaknesses to become a better trader.
• 🚫 Avoid letting one mistake overshadow the good things you're doing in your trading strategy.
• 📊 Understand the concept of adding and reducing shares to maximize profits without increasing risk.
• 💡 Use proper risk management to ensure you don't exceed your maximum risk threshold.
• 📉 Recognize that trading is forgiving due to constant opportunities, but also unforgiving due to the high cost of mistakes.
• 🔄 Adding shares can lower your average entry price and increase your stop loss, reducing the risk on the trade.
• 🔄 Reducing shares or raising the stop loss can help lock in profits and reduce risk after an initial gain.
• 📌 Be cautious with tight stop losses; they can lead to frequent stops and potential slippage issues.
• 📝 Always follow your trading plan and avoid making adjustments in real-time that could negatively impact your profitability.
• 📈 The 'add and reduce' strategy can significantly accelerate profits, but it requires discipline and understanding of market trends.

Q & A

What is the main topic of Jared Wesley's lecture?

The main topic of Jared Wesley's lecture is how to maximize trading profits with one small change in trading strategy.

What does Jared emphasize as a common mistake among traders?

Jared emphasizes that a common mistake among traders is overcomplicating the trading process and letting one issue ruin all the good things they are doing.

What is the importance of understanding your game in trading, according to Jared?

Understanding your game in trading is important because it helps traders focus on their strengths, minimize their weaknesses, and avoid making costly mistakes.

How does Jared suggest traders can accelerate their profits?

Jared suggests that traders can accelerate their profits by adding to their positions strategically without increasing their risk, a concept known as 'add and reduce'.

What is the significance of the 'add and reduce' strategy in trading?

The 'add and reduce' strategy allows traders to increase their potential profits without increasing their risk, by adding more shares to a winning trade and adjusting the stop loss accordingly.

What is the psychological aspect of trading that Jared briefly mentions?

The psychological aspect of trading involves the mental challenges and emotional barriers that traders face, such as fear of taking the same stock twice in a day or being overly greedy after a win.

Why does Jared stress the importance of not deviating from your trading plan?

Jared stresses the importance of not deviating from your trading plan because it is designed to help you be profitable and productive. Deviating from it in real-time can hurt your odds and lead to unnecessary mistakes.

What is the 84% rule that Jared refers to in the context of trading?

The 84% rule is not explicitly defined in the transcript, but it likely refers to a guideline or principle that Jared uses to determine when to add to a trade or adjust his strategy, based on his experience and trading plan.

How does Jared address the issue of slippage in trading?

Jared addresses slippage by advising traders to be aware of its impact, especially when using tight stop losses. He suggests that traders should consider the potential for slippage when setting their stop losses to avoid being stopped out prematurely.

What advice does Jared give to new traders regarding the 'add and reduce' strategy?

Jared advises new traders that the 'add and reduce' strategy is a higher-level concept that may be challenging to master initially. He suggests that new traders should focus on taking good trades consistently before attempting to implement more complex strategies like 'add and reduce'.

Outlines

00:00

📈 Introduction to Trading Profit Maximization

Jared Wesley introduces the topic of maximizing trading profits through a small change in trading strategy. He emphasizes the common issue of overcomplicating the trading process and suggests a simple yet effective method to accelerate profits. Jared highlights the importance of not being one's own worst enemy in trading and focusing on strengths while minimizing weaknesses.

05:00

📊 Understanding Risk Management

The paragraph discusses the concept of risk management in trading, using a hypothetical trade scenario to illustrate the importance of setting a maximum risk limit. Jared explains how to calculate the number of shares to trade based on the risk tolerance and stop loss, and how to adjust the stop loss to minimize risk while maintaining potential profit.

10:01

🔄 Adding and Reducing Shares for Profit

Jared introduces the strategy of adding and reducing shares in a trade to maximize profits without increasing the risk. He uses a detailed example to show how adding shares at a better entry point can lower the average cost and raise the stop loss, thus reducing the risk and increasing the potential gain. The concept is applied to a trending stock scenario, demonstrating how to take advantage of a good setup.

15:02

🚀 Accelerating Profits with Breakouts

The focus shifts to how traders can accelerate their profits by taking advantage of breakouts and other trading setups. Jared explains that many traders miss opportunities by only taking the first trade and not re-entering on breakouts. He emphasizes the psychological aspect of trading and how overcoming fear can lead to significant profit gains.

20:05

📝 Calculating Profits and Risk

Jared provides a detailed calculation of profits and risk in a trade scenario, emphasizing the importance of understanding the numbers. He breaks down the math behind adding shares and adjusting stop losses, showing how it's possible to make substantial profits with a single trade while maintaining a fixed risk level.

25:06

📉 Handling Emotions in Trading

The paragraph addresses the emotional aspects of trading, such as fear and greed, and how they can impact decision-making. Jared discusses the mental block some traders have about taking the same stock symbol twice in a day and encourages traders to focus on the trade setup rather than emotional barriers. He stresses the importance of having the right mindset to take advantage of opportunities.

30:07

📈 Maximizing Profits with Add and Reduce

Jared explains how the add and reduce strategy can be used to accelerate profits in a trending market. He provides a hypothetical example of adding shares at different entry points and how it can lead to a significant increase in potential profits. The paragraph also touches on the importance of money management and the nuances of adding shares, such as buying power and slippage considerations.

35:08

📉 The Power of Add and Reduce

The paragraph discusses the power of the add and reduce strategy in trending stocks and how it can lead to substantial profits. Jared emphasizes that while not all trades will provide the opportunity for aggressive add and reduce, understanding the concept is crucial. He also addresses the importance of managing risk and the potential for slippage and buying power issues.

40:09

📉 The Importance of Trading Plan Adherence

Jared stresses the importance of sticking to a trading plan and not breaking it due to emotions or fear of slippage. He shares a personal experience where he adjusted his stop loss to avoid slippage, only to miss out on a significant profit. The paragraph serves as a reminder that adhering to a well-thought-out plan is key to successful trading.

Keywords

💡Add and Reduce

A trading strategy where a trader adds more shares to a profitable position, thereby increasing the potential reward while managing the risk. In the video, Jared Wesley explains that by adding shares at a better entry point (lower cost average) and raising the stop loss, a trader can potentially increase profits without increasing the risk more than their predefined risk tolerance (one R). This strategy is used to accelerate profits in trending stocks.

💡Risk Management

The process of controlling and mitigating the risk involved in trading. In the context of the video, risk management is crucial as it allows traders to protect their capital and ensure that they do not exceed their maximum risk per trade. Jared emphasizes the importance of not risking more than one R (a predefined risk amount) and adjusting stop losses to manage risk effectively.

💡Stop Loss

A predetermined price at which a trade is automatically closed to limit potential losses. In the video, Jared discusses the importance of setting stop losses and adjusting them as the trade progresses. He explains that by raising the stop loss, a trader can lock in profits and reduce the risk while still allowing the trade to potentially reach a higher target.

💡Cost Average

The average price at which a trader has bought shares in a stock. In the video, Jared explains how adding shares at a lower price can lower the overall cost average, which can be beneficial if the trade moves in a profitable direction. This strategy can help in maximizing profits by reducing the cost per share.

💡Psychology of Trading

The emotional and psychological aspects that influence trading decisions. Jared Wesley touches on the psychological aspect of trading, mentioning that many traders are their own worst enemy by letting one mistake overshadow all the good decisions they've made. Understanding and managing these psychological factors is crucial for consistent trading success.

💡Trend Trading

A trading strategy that involves buying or selling assets based on the direction of the market trend. In the video, Jared emphasizes the importance of identifying and following trends in the market. He suggests that add and reduce strategies are most effective when applied to trending stocks, as they provide a higher probability of success and profit.

💡Entry and Exit Points

The specific prices at which a trader decides to enter or exit a trade. In the video, Jared discusses various entry points, such as the four-bar play, buy setup, and breakout, and explains how these points can be used to initiate trades. He also talks about the importance of managing exits by setting appropriate stop losses and taking profits at target prices.

💡Slippage

The difference between the expected price of a trade and the price at which the trade is actually executed. Jared mentions slippage as a concern for traders, especially when dealing with tight stop losses. He advises traders to be aware of the impact of slippage on their trades and to account for it in their trading plans.

💡Support and Resistance

Price levels at which a stock is expected to stop falling (support) or stop rising (resistance). In the video, Jared explains that support is not a specific price point but rather an area, and traders should not rely on exact price levels for their stop losses. He suggests giving the market some room to move within these support and resistance areas.

💡Consistency

The ability to perform consistently over time, which is crucial in trading. Jared emphasizes the importance of maintaining a consistent approach to trading, including the use of add and reduce strategies. He warns against the temptation to deviate from a trading plan in real-time, as this can lead to poor decision-making and reduced profitability.

Highlights

Jared Wesley discusses a strategy to maximize trading profits with a small change in approach.

Traders often complicate the process, making trading more difficult than necessary.

The lecture focuses on a concept that hasn't been discussed in years and promises to help traders improve.

Many traders are their own worst enemy, letting one mistake overshadow their good decisions.

Trading is a business that is forgiving due to constant opportunities but unforgiving due to the high cost of mistakes.

To be a great trader, one must know their game and not deviate from it, focusing on strengths and minimizing weaknesses.

The concept of adding to a trade to accelerate profits is introduced, with an example of a 5-minute and 2-minute chart trade.

By adding to a trade, a trader can lower their cost average and raise their stop loss, effectively shrinking the trade and allowing for more shares.

The strategy of adding to a trade without increasing risk can lead to significant profit gains, as demonstrated with a hypothetical $11,000 gain on a $500 risk.

The importance of not treating every trade as a standalone opportunity but rather as part of a larger strategy is emphasized.

The lecture highlights the psychological aspect of trading and the need to manage emotions when adding to trades.

The concept of 'add and reduce' is introduced as a powerful tool for experienced traders to accelerate profits.

The lecture warns against the pitfalls of overcomplicating trading and the importance of having a consistent, well-thought-out plan.

The idea of managing risk by adjusting stop losses and target gains is discussed, with the emphasis on not always using the tightest stop.

The importance of sticking to the trading plan and not making adjustments in real-time is stressed to avoid costly mistakes.

The lecture concludes by encouraging traders to explore the 'add and reduce' strategy and to understand its nuances for better profitability.

Transcripts

hey guys Jared Wesley here of live

Traders and it is that time of the

week it's lecture time and this week

we're going to talk about how you can

make more money with one small change in

your trading all right you guys are over

complicating the process making this

business way more difficult than it

needs to be but today we're going to

make one small change to accelerate

profits all right trust me it's a good

good one and it's a topic it's probably

been three or four years since I've even

talked about this topic so you

definitely want to stick around for it

guys because I think it's something that

will absolutely help you become a better

Trader if you like the videos please

click that like button smash Hammer that

subscribe button I'm Jared Wesley of

live

Traders let's get to

it

this week's lecture topic is how to

maximize your trading profits with one

small change and I guarantee

you this is a topic that you're not

expecting one that I haven't done in

years plural it's been a long time um

hopefully it speaks to some of you it

takes a little bit of brass in the

pocket to do this um but uh it is a very

effective way to maximize profits make

money um and be a generally better

Trader now obviously um you're certainly

going to want to take good trades um but

um I just think a lot of Traders are

Their Own Worst Enemy if that makes

sense a lot of times you're doing many

things correctly but you're letting one

thing ruin everything else right does

that sound like you a lot of times where

it's like you check off a list of 10

things and you're like yeah I got eight

or nine of these things down but that

one thing you're struggling with tends

to supersede or overcome all the other

good things that you're doing um and

it's it's not it's not good right for

example being up Monday Tuesday

Wednesday Thursday and having one bad

Friday taking out all your gains from

Monday to Thursday and that one thing on

Friday might have been adding to a

losing trade or not taking a stoploss or

over trading or something like that um

so

it's it's just something you have

trading is a business where it's

forgiving and very unforgiving meaning

it's forgiving because tomorrow you're

going to get another opportunity to

trade that's the forgiving part of

trading the unforgiving part of trading

is you can't make many mistakes and if

you do the Market's going to take your

money and you're going to pay for those

mistakes okay um so my point simply is

to be a great Trader you have to know

your game and not deviate from your game

all right we're all good at something

and not good at other things focus on

your strengths try to minimize your

weaknesses and try to keep out the

mistakes and a lot of that psychology

although today's lecture is not about

psychology a lot of it's psychological

so let's talk

about this concept all right right here

we have a chart with a 5 minute and a

2-minute chart okay with two separate

trades on it right over here the entry

is $24 it's kind of a pseudo the first

bar is a little bit lower than the other

two it's like a pseudo four bar play

right 204 is the entry stop loss is

20335 okay so standard trade is in this

case just for the lecture purposes

standard trade is to get two to one

reward to risk right so in this case a

$130 gain or 20530 right if your stop

loss is

65 65 * 2 is $130 all right and that

would make 204 plus $130 is

20530 okay so the entry is 204 the stop

loss 20335 say you're hypothetical

hypothetical you're risking $500 you

need about roughly 770 shares okay

Target $2 20530 gain $11,000 that's

perfect right it pops up it pulls back

and boom it goes up to like 20650 so in

this case this is a winning trade cool

great same exact chart right same exact

chart but now you have a two-minute buy

setup right lower high lower high lower

high lower high bottoming tail dogee

Bell little bit of support right there

you're getting at

20385 stop loss is

20350 okay A little tighter 35 cents

instead of 65 cents

so same entry 20385 stop loss 20350 risk

500 you need I think it's right 1428

shares let me just do that real quick um

yep that's right okay roughly 1428

shares and your target 2 to1 is 20455

it's tighter smaller because you're in

earlier and the stop is Tighter and then

you get that basically right there prior

pivot High something like that okay two

separate trades completely Standalone

trades this first one is kind of a

pseudo four bar play the second one is a

buy setup

right you guys know where I'm going with

this now you're like oh I think I know

where he's going with this what

if what if you didn't treat it as two

separate

trades what if you treated as two

separate trades that are the same you're

like what you just said the same thing

what if Jordan's on on point you're

always on point you've been quiet though

lately what's going on with you in the

chat room I me I'm waiting for your

brilliant ideas um what if

you added so let me explain let me go

back let me go

back you can't really take both of these

trades right true or false if you take

the first trade you're still in the

first trade when the second trade

triggers right you are still in the

first trade it goes up to like

20460 pulls back and then hits Target so

you're still in this trade when the

second trade triggers so most of you

would skip the second trade tell me I'm

wrong you don't have to tell me it's

rhetorical I I watch you guys every day

all right most of you would take the

first trade and just skip the second

trade be like all right I'm already in

it I'm already in it yes that's what

most most of you would do okay but what

if you grew a pair all right and you put

some big old brass in your pocket okay

and you

said well I'm already in it with 770

shares I'm already in it and I'm

watching this thing pull back and I'm

going hm this thing's starting to look

pretty good right it's starting to look

pretty good and then you start seeing

the buy setup form and then the

bottoming tail and then the dogee bar

and you're

like I can't take that

but you can you can and the reason you

can is you're gaining 15 cents on the

stop loss right it's not 20335 anymore

it's 20350 so you're gaining 15 cents

and your entry is 15 cents

lower so if you choose to add shares

your cost average will come down and

your stop- loss go goes up think about

what I just said your cost average comes

down and your stop loss goes up that's

shrinking the trade which means you can

add more

shares

okay oh vow you can right so second

entry

20385 stop loss 20350 the risk is going

to have to be $115 or $330 shares why

because when we do add and reduce you

can never ever ever ever risk more than

your maximum risk maximum risk is $500

you cannot go higher than

$500 okay so if you bought 330 shares at

20385

okay your cost average is now

$23.95 give or take your stop loss has

been raised to 20350 so now you have a

45 Cent stop loss so the original trade

had a 65 Cent stop loss the second trade

had a 35 Cent stop loss and we're kind

of not quite cutting the difference but

close so now now all

in you have 1,00

shares if you hit the original Target

which was

20530 that was the original Target

okay you're gaining yourself almost one

R right one R is $500 you're gaining

$479 which is about one R so you could

have taken the first trade and gone to

that 205 Target and made

$1,000 you could have

added with no more risk I want to be

very clear about that you could have

added with no more risk there is no

additional risk it's still 500 bucks

you're not risking any more money and

right it to 20530 and you made yourself

an extra one

r that sounds like a good idea right now

if you missed the first trade you could

have just taken the second trade and

done really well but we're assuming you

took the first trade okay so let me

break it down like this for you guys

okay a lot of people get very confused

with this I don't know why they just

do you can't go above 500 bucks that's

your max that's the one thing you always

have to keep you can't go above 500

bucks all right

but if you add and raise your stop and

lower the average cost you gain your

risk becomes smaller right let appease

me for a second just for a moment if you

had the first entry at

204 and the stop is

20335 you have $500 risk duh right but

what if you raise the stop to

20350 now it's it's a.50 C stop loss

right with 770 shares right and now your

risk is

$385 do you guys understand right now

like where I'm going with that some

people are like well how do I know how

much I can add or how much I can't add

well the first thing you're going to do

is raise your stop loss up to the new

stop loss right so the original stop

loss is

20335 but the new stop loss is 20350 so

the first thing you're going to do is go

okay okay what if I don't add and just

raise my stop to

20350 well your risk gets cut down

$115 your risk goes to$ 385 why because

you raised your stop- loss 15

cents so now you have $115 to play with

if you want to you don't have to you can

just raise your stop loss and and ride

it out that's fine but now you know

you're like well I got $115 just laying

on the table I'm not utilizing it I'm

not doing anything with it what if I put

that $115 to work instead of sitting on

the sofa eating potato chips why don't I

put that $115 to

work well that's what we did and that

$115 was 330 shares right on this trade

right and what did It ultimately do it

also lowered your entry price not by

much only four or five

cents so now you have 1,00 shares

roughly $500 risk and that's your gain

potentially a134 and you can see 1479

versus

1,000 okay by adding a 20 20385 you gain

an extra one R 500 okay now let's do it

again now what do we

have this is a great opportunity to take

advantage of a trending stock this stock

is already in an uptrend it rips higher

pulls back gives you an area of support

50 % retracement Rising moving average

bottoming tail narrow body bar it's got

a lot of goodness to it right there's a

lot of good things going on here uh in

this chart so you're looking at this and

you're think okay I see an opportunity

here right cool cool cool cool we're

going to get granular with this it's

going to get a little bit complicated in

a couple minutes but right now let's

keep it simple and we'll just get

slightly more complicated as we go each

slide okay so you're all looking at it

going sweet

I like it that's a nice buy setup you

know you're getting in at like I don't

know 4310 or something like that and

your stops very tight very very tight

okay cool right

cool now let's take a little more of the

future off same same chart just took a

little bit of the gray off so there's

the buy set up cool now you're like who

whoa wait hey wait a second what's this

right what's

this this is a nice consolidation

holding the rise moving average and this

consolidation is between this high and

this pivot low and you're like that's

not bad also again look at it riding the

moving average here beautiful right

beautiful that's a possible area to add

or it's a standalone trade see the best

ads are Standalone trades meaning you're

not adding just because you're already

in it you're adding because it's a trade

by itself the first one this is a trade

by itself the second one that's a trade

by

itself but if we add we can just have

one big trade okay but no additional

risk no additional risk okay now let's

do it again uhoh this just keeps getting

better and better and better doesn't it

now I have buy set up down here breakout

over here three bar play up

here and

yet most Traders will just take the

First Trade walk away they just take the

first trade and walk

away they won't even get back in on the

breakout oh I can't take the same stock

twice how you don't have to answer

rhetorical how many of you guys have

like an emotional block about taking the

same stock symbol twice in the same day

not if you stopped out because I know

you're jonesing to take it if you stop

out if you stop out you're like I'm

getting back in this thing but if you

hit your target tell me the truth don't

it's rhetorical how many of you are

scared shitless to take the second trade

you win on the first trade you're like

oh I already got my money from that

stock today I'm I'm not going to be

overly greedy so I'm not going to take

the breakout I'm not going to take the

three bar play I would say most of you

now if you stop out on that first trade

you're like yeah I'm getting right back

in heck yeah look at this I'm getting

right back in it's a mental mind F right

that's the truth it's a mind F okay so

when you look at it buy set up breakout

three bar play is what three cents below

the low of the day wait the three cents

PS if you're that concerned wait the

three cents

right man so you're looking at it and

you're like H

juicy right so let's keep

going now we take the whole thing off

and you're like holy

[ __ ]

right buy setup Breakout three bar play

rip holds that trend line pretty

well right holds that trend line pretty

well so now the average Trader just

takes the first trade right there and

they just walk away right they just take

the first trade and walk

away that's okay there's nothing wrong

with that I'm not trying to tell you

that taking a good trade is bad taking a

good trade is good I'm just simply

saying could we grow a pair

take what is a genuinely nice breakout

and three bar play and accelerate our

profits the answer is yes if you have

some Stones right

so there's the three entries for those

of you that are struggling to see them

entry here Alie is my arrow in the right

spot I'm just messing with you entry

here

entry

here oh what is this little topping tail

monster volume Spike after one two three

four bars up and three of those four

bars are really wide range

bars I would say that's what

novice ending volume right novice ending

volume right

okay so that's what it looks like now

let's let's apply some numbers to it now

let's make that blue why is that not

blue that's no

outline that's better sorry guys all the

other slides are blue all right so now

let's get to it okay let's get to

it now I'm going to fry some of your

brains here so take your calculator out

and get a piece of paper at the same

time this is the part that really just

messes with people they just have a hard

time with this okay which is why I can't

say that that would not be politically

correct never mind let's move on all

right um let's just say it's why people

like me never win math competitions okay

people that look like me um people that

look like my kids do just not people

that look like me so let's fry the brain

okay first entry is

4315 okay first stop- loss is

4305 okay that's the very first trade so

buy five minute buy setup entry is 4315

stops for so if we're doing $500 risk

don't worry I'm going to break it all

down on the next slide

okay so if we're doing $500 risk 10 cent

stop we need 5,000 shares that's a lot

okay that's a lot moves up right moves

up consolidate it's out okay 4340 second

entry stop

4330 that's the breakout entry right

there that's the breakout entry okay

third entry is

4355 three bar play stop is

4345 that's the three bar play right

there if you had bought 5,000 shares at

4315 with a 10cent stop and sold at

4410 okay which is way way up here you

would have made

$4,750 or 95 hour which is extremely

impressive right extremely impressive 9

and a half r on any trade is amazing

amazing but how much could you have made

by adding well the average entry would

have been

4336 the new raise stop would have been

4345 you're already in the money with

15,000 shares we made

$111,000

$111,000 and you never ever ever ever

ever incurred more than one R risk in

fact you're about to see it on the next

slide in fact after the first

trade right at right at the first ad

second trade first ad right you're

already in the money you're already in

the

money and you're like what does that

mean let me show you okay so you took

the first trade there's risk on the

first trade you could have stopped out

but by the time you add on the second

trade at 4340 you can't lose anymore

it's impossible let me show you how let

me show you assume a $500 risk per trade

and a full Lot ad for each new trade so

here's the initial entry 4315 by 4305

you bought 5,000 shares so far you're

with me you're with me

okay second entry was a 5minute breakout

4340 by 4330

okay let me go back real quick yep

that's right okay 4330 right you add

5,000 shares 4340 that's where you added

so remember you bought 5,000 at 4315 and

you bought 5,000 at 4340 so far you're

with me you bought 5,000 here you bought

5,000 here

okay your new cost average is

43275 how well 5,000 shares time 4315 is

215,000 blah blah blah 5,00 ,000 shares

* 4340 is

217 2115 + 2117 is 432 divided 10,000

shares there's your cost average there's

easier ways to do this I'm just breaking

it out long form breaking it out long

form 432 what's the guys what's the new

stop loss I'll give you a hint I'm going

to put my cursor right next to it what's

the new stop loss my cursor is sitting

next to it don't don't get this one

wrong what's the new stop

loss talk to me come on go

what's the new stop

loss that's right it's

4330 what's the new cost average 43

274 now it's not much it's not much but

if the trade stops out assuming no

slippage if the trade stops out you

still make two and a half cents right

you still make 250 bucks you still make

a half of an R to trade stops out think

about what I just said you make a half

of an R if it stops out if it doesn't

work

okay

but

but what if it

does right is my math wrong Ali I don't

think my math is wrong Ali will help me

okay exactly it's not always well Ali we

know this because we on the first

example only added what $115 risk does

that make sense now now guys now I'm

really going to throw you for a curve

ball curve ball what could we do here

Jordan this is where you need to step up

forget the third entry I'm not there yet

we're not at the third entry at what

could we do

here talk to me big brass balls talk to

me who's got the big

coones come on somebody say it just say

it Jordan thank you thank you for

stepping

up guys we're

$250 in the

money in the

money so not only are we not risking 500

we're gaining

250 what could we really do here some

people are really confused what we could

do is risk it all if we really really

wanted to we could risk it all you're

like what does that mean well I could

take my $500 risk and add it back in

this case $750 and add it

back does that make sense what I'm

saying instead of adding 5,000 shares at

4340 you could add like 10,000 shares

there and have 15,000 somebody do the

math for me I should have done it but I

was lazy so what I'm saying is we added

5,000 shares at 4340 okay and our new

cost average is 43 274 great that's

awesome but we're in the money we're in

the money I still have the possibility

or opportunity if I still want to risk

$500 I can still do that I'm not saying

you should I'm just simply saying you

could well what if I added 10,000 shares

there now what's my cost average so now

I have 15,000 shares right so let's do

it 4340 time 10,000 shares should be

easy math 434,000 plus

25,7 40 equals right and we're going to

divide that by 15,

43316 guys I'm not even close I'm not

even close I have a 1.6 C risk times

15,000 shares I'm only risking 240

bucks I can't probably add another 5,000

shares I could probably add 15,000

shares

here right think about

that do you got real quick real

quick are you following me what I'm

saying I need just give me a yes or no

what I'm saying so far is that making

sense are you following me with regard

to if I want to add more to this I could

add more than 5,000 shares right I could

add 10 15 I I could add a lot of shares

here now there's nuances here I'm not

after the

nuances okay guys there's tons of

nuances buying power becomes a concern

getting filled becomes a concern

slippage becomes a concern yes yes yes

that's not what I'm after I'm after the

concept I want to make sure you're

understanding the concept

okay my point is in this scenario we

added 5,000 shares great but because of

our money

management

okay you could have added way more than

5,000 shares

right yes I'm not saying you're this is

certainly not going to happen on every

trade it's the concept that I'm after

the the idea here is accelerating

profits without ever increasing your

risk more than one R accelerating

profits without ever increasing risk

more than one R some scenarios will be

like the last one where we can only

increase by 330 shares which is 115

bucks this is a scenario where you could

increase by 15,000 shares and still be

under your risk okay it's the concept I

want you guys to understand it's going

to vary for each trade some trades are

going to be like this and these are like

holy [ __ ] this is crazy good which is

why I'm using as an example and other

trades you might only be able to add 50

shares 100 shares not much but it's the

idea of it it's the concept of it okay

it does Hunter it does but in some

scenarios it's not a big deal like for

example in this scenario Hunter it's

it's really not because the first

trade's easy right the second trade gave

you a very long time to do your

calculations correct the third trade a

little tougher because you don't have

much time this is a five minute chart

the second ad here [ __ ] you had like 45

minutes to think about that one but

you're right there will be time when

this this happens in like a two or three

or 4 minute period okay so my point

though is how much you can accelerate

profit here so now let's just continue

with the example so now let's just say

okay we add 5,000 shares we're in the

money 2 and a half cents 2.6 cents okay

now the third entry is the three bar

play the entry is

4355 and the the stop is 4345 let's say

we add another 5,000 shares but now our

new cost average is

43366 10,000 *

4327 5,000 * 4355 do the math it's

15,000 shares cost average the new stop

loss is

4345 4345 so we are 8.5 cents in the

money 8.4 cents in the money so if you

take 08 4 and you multiply by 15,000

shares you're already $1,260 in the

money you're already 2 and a half hour

in the

money if you stop

out if you stop out you're

already 2.5r in the money if you stop

again it assumes no slippage blah blah

blah but for example purposes I think

it's fine

okay this is the

power of ADD and reduce

but it has to

be on something really good to be able

to get that you're not going to be

adding and reducing on a sideways

trending stock or a market that's really

choppy you're going to be adding and

reducing on trades that are that look

good that have the possibility the

opportunity to be trending because

that's how you make the most money on an

ADD and reduce is trending okay now

another Factor here is what what

management right management some

people were like well I'd be out already

before this breakout even happened Jared

that's a that's a 25 cent move that's

two and a half R I'm done that's okay

I'm okay with that I don't have a

problem with that you get up two R and

you walk away but not everybody's a two

R All or Nothing Trader some people are

4r Traders some people are pivot Traders

some people are bar by bar Traders so

just because you're a two R All or

Nothing Trader doesn't mean that

everyone else has to to sit on the

sidelines right so again it does matter

sometimes you'll just be out right and

then if you really like it you'll just

get back in at 4340 because it already

went two and a half hour like for me I'd

already be gone on this I'd be out I'd

be gone of course I'd have a wider stop

loss for sure under the whole number but

the point though

is this is how you can accelerate

profits in a big time way and again to

go back not all of them will give you

this

opportunity to make stupid amounts of

money now three are isn't bad right but

not all of them will give you this

opportunity sometimes it's like this

it's a it's a kind of what I would call

a rudimentary add and reduce yeah it's

better right you're making 50% more

money you're making one or more it's not

chump change but you are risking a

little bit to get

it the second example this is this is

this is the Wilt Chamberlain of trading

right that doesn't get any better than

this and again like Ali said some of you

might have the prior pivot high as your

target 4360 maybe you add and just walk

away at 4360 okay fine guys that's the

beauty isn't it there's so many

different ways you can do

this you don't have to do it the way

I've suggested you don't have to add

full you could in this case double your

you're not you're not doubling your risk

but double the shares you could take a

half lot risk a third lot literally you

could take the first trade with a full

lot and then you're like a little

nervous and scared so you just add a

th000 shares instead of 5,000 shares

there's a lot of different ways you can

do it

okay what are we reducing you're

reducing your risk Susan Susan after the

first trade after the first trade at the

at and then at the second add how much

risk did you

incur how much risk did you

incur the answer is

zero right

zero now could you could you have added

back full full full full full full no

you're not down to$ 250 you're up $250

Susan you're in the money to it's a

$750 difference you're not down to 250

you're in the money

250 you're the one who's weren't you the

one who just said I'm fast at

math I know I'm mean I apologize that

was uncalled for right you're in the

money

$750 change I'd call that a reduction in

Risk wouldn't you I'd call that a

reduction in Risk now again to be fair

to be fair to be fair that also depends

on how much you add you could add more

than this and not reduce risk you could

add less than this and still reduce risk

it all depends on just how aggressive do

you want to be how big are your Stones

how good is the stock how good is the

trade how trendy is the day could you

imagine the other day when Nvidia put in

like a $20 day if you had found one or

two areas to add on that and you trended

like that that's like a 20

move right in fact this example it's 11

$1,000 gain do the math that's 22R it's

22R that's an entire month on one trade

and not just an average month a good

month now let's pour some cold water

let's pour some cold

water they don't always

work they don't always

work they don't always

work okay

let's take a

look so now I have a

stock turnaround bar right it's a

legitimate turnaround bar right that's

that's a pretty nice play right 1130 by

$11 Target Two to1 1190 kind of just

misses it by like a nickel right just

misses your target okay so 1130 by1 $500

risk shares ,650 Target 1190 gain would

be 1,000 bucks okay that's the goal and

there's nothing wrong with this pattern

okay that's true too Oli you can

absolutely do that but you're not going

to accelerate profit but you're correct

you would certainly reduce risk um

now there is the same chart that you

just saw same chart you just saw turn

around that was a one minute chart now

we're looking at a five minute chart

what do you have lower high lower high

lower high lower high little bottom tail

not bad okay

I'm going to hand this over to Ali now

and he's going to teach the next few

slides um anyway um but anyway lower

high lower high lower high lower high

bottoming tail 1145 is the

entry

1125 is the stop loss

okay that's a standalone trade the the

turnaround bar is a standalone trade

right go back go back the the turnaround

bar right here this is a standalone

trade nice trade nothing wrong with

it this trade right here buy setup

Standalone trade right there nothing

wrong with it okay cool cool cool cool

now there they

are right there they are what if you add

so hear me out you buy $130 by $11

that's the first trade then you add

1145 okay by

1125 so what are we doing we're buying

higher up by 15 cents but we're raising

our stop by

25 so you actually lowered Risk by $25

but increased the possible gain by 2x

from 1,000 to almost,

1900 okay so average entry is

1138 raised stop loss is

1125 your risk 475 now you're going well

geez Jared where is that those

3650 shares coming from there's your

1650 there's your 1650 from trade

1,650 from trade

one there is the 2,000 from trade two

right there is the 2,000 from trade two

so there's

1,650 I know I know just for whiter

shades of pale + 2000 = 3650 okay so

that's where the 3650 comes from got it

that's where we got 3650 shares our stop

loss is 1125 so what we're really

risking is 13 cents right we're really

risking 13 cents 1138 by

1125

okay 475 bucks possible gain about 199

now before I continue before I

continue what's one thing you could do

with your target notice on all three

examples we've used three examples on

all three

examples I have used the original

Target what could you also do if you

were a little bit nervous or scaredy

pants you could simply

just use two R from the ad

right yeah you can lower the target

exactly maybe you don't want 20 R maybe

10 R is enough you're like well I don't

need to get to 4410 43 is fine maybe you

don't want to wait for

1190 maybe you're adding just to reduce

the

Target right so to get two to one out of

this trade guess what you don't need

1190 anymore you only have a 13 cent

stop loss you only need 26 Cents you

literally could get out of this thing at

what

1164 instead of 1190 you could I'm not

saying you should I'm just simply saying

you could say oh man things have changed

a little bit I'm I still want two to one

still risking the same amount of money

but the goal here the general goal is to

accelerate profits not take the same

profit accelerate profit so you actually

lowered your risk by

$25 okay the possible gain is two to

one okay

now what about

this [ __ ] right

[ __ ] this five minute triggers and

actually does a pretty good job guys why

did I bring up that comment why did I

bring up that comment Jordan talk to me

my curse is in the right spot take a

look why I why did I bring up that

comment about you could lower your

Target because in this particular

case you would have hit Target you

literally would have been out of this

thing for a two R

game see it right here on

1164 that's two

R and then it

failed so there are nuances to this

meaning there are times when you're

going for the big the big win it goes to

R and comes all the way back against

you so that's the question can you

handle it if and when it does this right

it popped nicely it actually a really

nice initial pop on the buy setup and

then it rolled over and then it went

higher for the rest of the day if you

added you actually stopped out and lost

money if you simply took the first trade

and let it go you would have made $1,000

when it hit Target the original stop

held

okay 100% Jordan you're getting two

slides ahead of me you're getting two

slides ahead of

me but you usually are all right

so nothing is

perfect nothing works every time

and the reason I'm commenting on this is

you have to be able to handle being up

one and a half two

hour and giving it back if you're

looking for five and 10 and 20 R

gains so if you choose to do add and

reduce

understand understand that often not

always but often you're taking away some

profits for a bigger gain look at it

like this this is the best analogy I can

think of off the top of my head and some

of you will get it and many of you won't

Aden reduces Brewster's

Millions Aden reduces Brewster's

Millions do you guys remember that movie

Richard prior John Candy great movie

early 80s I think it was all right sorry

Jordan I know that was like for you that

might as well have been like 1850

okay the concept in the movie movie you

can take $3 million today cash money

here it is take it or you can spend 30

million in 30 days and get 300 million

afterwards

okay that's the concept Sophia right

there's always a price to pay so you

could have just taken one or two r on a

lot of these trades or you can choose to

reinvest some of those profits for a

much larger gain I'll repeat you could

take the small one or two R and that's

okay no one's saying it's not okay or

you can reinvest some of those profits

you

made and look for a much larger gain

like the $1,000 example that would have

made you an entire month's profits in

one day if you were on $500

risk does that make sense folks yes no

not sure does that make

sense I just want to I just want to be

clear before I move on

it's a higher level

concept tougher for new people okay it's

probably not something I'd recommend for

new

Traders um but if you have and the

reason I'm commenting on this and the

reason I wouldn't recommend it for new

Traders is twofold

one it's a lot going on right there's a

lot happening you're already a little

jittery and Confused two two okay it's

important if if you take bad trades add

and reduce isn't going to help you and

newer Traders take bad

trades okay good Traders take good

trades and add and reduce can really

accelerate profits for a good

Trader okay because you're in the right

stuff all right so the key here like

everything in

trading is

consistency making sure you do this all

the time you can't just choose when to

do it and when not to do it not not

every trade will give you an opportunity

okay not every trade will give you this

opportunity but when it

exists you have to take it you can't

just sometimes decide to take it and

other times not because you might have a

trade like the last trade and it cost

you money right so this is the slide I

was talking about Jordan right

here better ways to manage all right

most Traders confuse High reward to risk

setups with tight stops this is not true

it's a flawed approach it only takes one

to run and that is true it takes one to

run but you're going to get tagged a lot

more often you know the slippage on

entry and exit is also nasty all right

high frequency trading is made sure that

it's not as scalable right I mean a new

Trader emailed me the other day and they

were brand new risking $5 a trade and

they're like yeah sometimes I use 5cent

stop loss

I'm like what use a nickel stop

loss if you get a penny slippage it's

20% what if you get a penny in and a

penny out it's

40% of your original trade I'm like what

are you doing so if you need 5 10 20,000

shares super tight stop losses you're

just you're itching for slippage I mean

you guys saw last week there was one day

just one day I took $700 in slippage two

trades each trade gave me $300 and some

do in slippage and it wasn't bad it was

only like 5% slippage it wasn't bad but

it's still 700 bucks

right so flawed approach that tight

stops are the best sometimes they're

good and sometimes they're not support

is not a penny it's an area thinking

that a support point will hold to the

penny is super extremely naive why do

you see when I take trades I'm giving

them 50 cents below those areas

sometimes even even more than

that I don't want to be that person that

just got peek-aboo tagged by a bottoming

tail by 10 cents and watch it go higher

so tight stops flawed approach support

is an area not a penny statistically

most losing trades stop out shortly

after entry from my experience when I

scalp most losing trades you're out

pretty quickly now again there are

exceptions to this you could be in a

trade that's doing well and a news

report comes out and changes everything

I'm talking about averages now okay so

here's step one of take High share size

to Target and low share size to

stops okay with this approach most

Traders will experience far fewer stops

and you when I say this approach I mean

this right here half the shares double

the

stop okay how often have you been

stopped by a nickel or even pennies then

watch the stock go to Target where am I

going with this I'm giving you a

broad-based approach here I'm saying Hey

look add reduce is awesome but it takes

some time to perfect it for newer

Traders it's going to be a little bit

more challenging two support resistance

it's not an area don't use the tightest

stop on the chart in fact I'd rather see

you take a wider stop loss half the

shares double the

Stop and like Jordan was commenting if

you do get tagged like the last slide

use the 84% rule the second trade works

way more often than the first trade from

my experience

at the end of the day and I've been

using this a lot

recently stop over complicating this

business realize that this trading thing

career business is not an exact science

which means support's not a penny the

tightest stop is not always

best you have to have a little bit of

gray a little bit of flexibility I know

that's very very hard for

engineers okay but you could still make

this very detailed right Ali you could

still say for example hyp these are

hypotheticals if the stop loss on the

chart's a dollar I add 25 cents if the

stop- loss on the chart's 50 cents I add

12 a. half cents right you could still

make it very very regimented right and

still very analytical very specific you

still could do that but when you're

making your

rules just make make sure you add in the

fact that stocks do strange things

sometimes meaning give them more room

half the shares double the stop okay do

those types of things so that there is a

little bit of flexibility built into

your trading plan not the kind of

flexibility that lets you take advantage

of yourself not that kind of

flexibility the kind of flexibility that

helps you stay in trades that may have

shaken you and I'm going to give you one

last example and then we're going to

call it a day

ah pennies matter follow your plan I

raised my stop loss because I didn't

want slippage I got tagged at

30.01 only to watch it hit Target don't

break your

plan this is a trade that I took as a

little bit of an ugly three bar play but

not terrible at 3050 my stop was

2985 okay and

um I lost $398 on it why because I

didn't want

slippage so instead of keeping my stop

loss at 2985 or even

29.95 I raised it up to

30.01 and what happened right here see

that orange line right there right I

think that one of the right there it

literally went

to

301 came in took my shares and then it

went to Target it

went $2

higher on a uh what was it 65 Cent stop

loss that's what happens when you break

your plan and do stupid [ __ ] okay it was

a $1,400 difference minus 400 versus +

$1,000 I'm showing this to you because I

make mistakes too I don't like what I do

should have taken a full lot on Apple

today cost me some money all

right your plan is your plan and it's

there for a reason it's there to help

you it's there so that you can be a

profitable productive Trader when you

start fiddling with your plan in real

time you're you're ruining or hurting

your odds and you don't want to do that

all right you don't want to do that so

guys I hope today I know that some of

the slides were a little complicated

okay okay like this slide over here for

example okay right there little

complicated I know but when you think

about the possibility to make

$11,000 on a $500

risk it's pretty impressive now again I

understand there's liquidity concerns

slippage concerns buying power concerns

all of those things it does not take

away from the power of the concept it's

still a very powerful tool in your

toolbox so I would suggest you at least

take a look at it take a look into it

because it can certainly help accelerate

your profitability in trading because it

doesn't take as many trades to get 5 10

15 R for the month you might add on two

or three trades in the month and they

might give you an extra two or three R

each and all of a sudden there's five or

six more r that you wouldn't have

otherwise had um

also to that point the tightest stop is

not always the best I find giving them

more room is usually better and for the

newer Traders out there half the shares

double the stop it's going to keep you

in trades longer if they don't work take

a look into the 84% play there's a lot

to unpack in this lecture but add and

reduce was the main topic that I wanted

to cover today so I hope you guys

learned a little bit about add and

reduce how to accelerate and maximize

your profits to be a better Trader I'm

Jared Wesley of live Traders we'll get

back at it again

next

week