Trading is all a game of nuances and how dozens of small variables add or reduce edge. Many traders have no edge or trade suboptimally because they ignore the level of nuance you need to optimize results.

Variables assessed in one trade could be the strength of a level 2 box, intraday, and daily chart, volume, positioning vs. VWAP / MAs, recent market context, broader market strength, time of day, catalyst, etc. All of these come together in a subjective weighting to deduce the EV.

Here’s a story I’d like to share. I’ve had a trader tell me they win in IPOs. On average, let’s say they make $10k trading IPOs. What they missed is that out of 10 trades, they won on 3 of them and made $30k but then in the other 7 they lost $20k. End of analysis?

What they missed is….

The 3 IPOs they make money in are the hot super in-play ones while losing in the 7 bs ones.

That is a huge opportunity from one simple change: only trade the hot ones!!

Now the trader is 3/3 with $30k PNL! It seems like an obvious example, but it’s such a common mistake I see that many people make.

Small nuances can lead to huge changes in PNL once identified. The difference of only playing if stock In-play or a certain amount of RVOL or only most extreme patterns or only if news catalyst.

Tiny changes can have outsized effects on PNL (IPO example).

My biggest realization? The frontside fighting trend was 90% of my headache, 90% of my large losses, and only 10% of my PNL. The nuance led me to wait for the “Right Side of the V.”

What are some nuances you’ve caught? What are some areas of your trading you might be overlooking?

Post Tags: trading

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