Maybe the most important ADVANCED-LEVEL topic in trading is understanding how EV changes through time. As each bar elapses, the probability, risk, and reward of the pattern change with it. One’s trading  &  system must dynamically reflect this.

The best analogy I can give is how poker players must adapt to every occurrence around them. The turn, river, and flop changes their EV. Each player’s betting changes their EV. It isn’t static based on the original hand. They’re handicapping each change that elapses over time.

This concept applies to every single chart and every single decision as a trader. It applies to trailing stops. It applies to system optimization. It applies to selling under resistance. It is all-encompassing.

“Right Side of the V” is an application of this premise.

Proper consolidation, pictured above, doesn’t just increase the Pr(success). It also increases the reward and decreases the risk across the spectrum of outcomes. Most importantly, this NON-LINEARLY IMPROVES EV! Most breakout traders fail because they overlook these nuances and ignore that dynamic.

If you buy a news headline & it isn’t going, every bar that elapses is likely decreasing your Pr(success), R/R.

I challenge you all to be more conscious and aware of how your EV is changing through time.

Ask yourself what is the impact of each bar as the pattern unfolds.

This scratches the surface of a topic best explained using video. My goal is to start focusing on more advanced concepts that will help great traders become elite.

Here is a full video I made on this topic:

Post Tags: trading video

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