Posted February 11, 2021
By Scott Stewart
Part 5: POP with Win/Loss Ratios
Welcome to the Rude Awakening for February 11, 2021
Were back today with Part 5 of your asymmetric trading series.
We started day one with talking about the problem, the problem being that we don't have an edge, we don't have an advantage when we simply buy stocks. It is a probability of 50% that we'll be successful in our assumptions. Then, we talked about the solution. That's building an asymmetric trade where we have a one to three ratio of risk to reward. So, for every dollar we risk, we have $3 of potential profit. After that, we got into bracket orders, and how to actually structure that type of a setup.
And yesterday, you learned everything you need to know about choosing the right trades.
After this ten-part series, you will have the edge you need to feel confident in all your trades, no matter what the overall market is doing.
Continue reading for a brief look at todays markets.
Jobless Claims Trending Down, But Higher Than Expected
Jobless claims hit a five-week low last week, the Department of Labor reported this morning, but they were higher than expected.
At the open, markets are showing strength, which either means theyre indifferent to higher-than-expected jobless numbers, or confidence in the fact the trend is going the way we want it to.
Yahoo Finance reports
New weekly unemployment claims pulled back slightly but held at elevated levels last week, and the prior weeks new claims were upwardly revised as the coronavirus pandemic exerted more pressure on the labor market.
The Department of Labor released its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:
- Initial jobless claims, week ended Feb. 6: 793,000 vs. 760,000 expected and a revised 812,000 during the prior week
- Continuing claims, week ended Jan. 30: 4.545 million vs. 4.420 million expected and a revised 4.690 million during the prior week
New weekly jobless claims fell relative to the prior weeks level, which was upwardly revised to 812,000 from the 779,000 previously reported. This brought new claims for the week ended February 6 to the lowest level in five weeks. And despite last weeks upward revision, the four-week moving average for new claims fell by 33,500 to 823,000.
By state, some of the most populous parts of the country saw encouragingly large drops in unadjusted new jobless claims last week. Florida saw by far the greatest decrease, with unadjusted initial jobless claims dropping by more than 51,000 last week. New York followed by a wide margin, with new claims in the state dropping by nearly 20,000. New claims in Maryland dropped by more than 19,000 as well, and initial claims in Texas fell by more than 13,600. On the other hand, California saw another surge in new claims, with these rising by more than 23,000.
On the whole, new jobless claims have been tracking a decline in COVID-19 cases, with the rate of new cases, hospitalizations and deaths retreating after a holiday spike. Over the past week, an average of about 105,000 cases were reported per day, dropping 36% from the average of two weeks earlier, according to data compiled by the New York Times. And the Biden administration recently boosted the weekly supply of COVID-19 vaccines sent to states by 28% to 11 million, offering hopes that widespread immunity could allow for faster reopenings and rehirings.Well see how unemployment numbers affect the markets today.But the important thing for you is to be aware of trends in the greater economy, to see how they affect markets.The good news is, as long as youre trading with a set strategy, and youre able to cap risk and predict your probability of profit, thats all you need to make money in any market.Youre going to learn exactly how to do that today, folks.Have a great rest of your trading day.See you tomorrow.Regards,Scott Stewart
Editor, Rude Awakening