Why should we focus on Small Gains in Trading?
What is repeatable has significant value.
Hey Everyone -
I’m very happy that many readers decided to join our Community after yesterday’s special offer. There are 7 spots left at the special price which expires at midnight tonight. I would strongly encourage you to join us. I don’t see much downside in you joining. In fact, there is considerable upside.
Below, I will talk about why Hard Work is better than Talent.
Why is that? It’s because my overall methodology is primed on the concept of stacking many, many small gains over and over again. This comes from being diligent and being hard working, not from being talented.
Because it’s focused on small gains and premised on diligence rather than talent, it’s something that many people should be able to benefit from. I’m going to show some math below.
This is a table below that I posted on our Letters from Larry Instagram page (feel free to follow it as I intend to post more educational content in the future rather than just P&L figures).
From this chart below, we can see that if a system is created to extract consistent small profits, they add up/accumulate very quickly and end up as a very nice result at the end of the year.
You can click the image below to view the post on IG.
Members know that I don’t really go for home runs. For stock ideas outside of ES/NQ scalping, my stock-selection strategy is that I share frequent intermediate-term ideas that are high single-digit or double digit potential ideas.
Another recent example is me sharing JNJ at 144. Now it’s 148. It happened in under a week. Such 2-4% frequent ideas like this are extremely additive to portfolio performance while REDUCING portfolio risk given the short exposure time. The best part is these types of setups show up ALL THE TIME.
Members will notice that these stocks literally touch these levels, bounce, reach target and then retrace after. But as long as the expectation was 2-4%, who cares about the retracement?
We can see below that for much of the last 14 months, even though I’ve remained extremely critical of U.S. macro worries, I am able to build my pie one step at a time using such a methodology.
While my strategy is about even with the S&P 500 over a longer period of time, you can see that my drawdown tends to be less severe when SPX gets into a corrective phase.
If my return is similar/slightly better than SPX and my drawdown is less severe during corrective periods, that means my risk-adjusted outcome is better.
My goal to members is that I will do my absolute best to help folks prevent a 10% portfolio correction. I want to help people cut the downside risk as much as possible. This is why much of commentary always has a cautious tone (I mean, I have to be cautious always!).
This is because our defined profit targets on the stocks we mention and our upside targets in scalping is rather conservative.
On the scalping side, I understand that most retail folks may not able to trade a full ES or NQ contract due to their sheer size, but the good news is that one can always start out with MES (Micro ES) or MNQ (Micro NQ) - which is 1/10th the size of the full contract (See education here) - that is, if they want to learn scalping.
It is also highly encouraged to paper trade for the first stage of a beginner’s journey. Highly, highly encouraged to be on a simulator first so that folks can see the rhythm/cadence.
Remember: small gains add up and they are safer for beginners/intermediate-level players. MES is $5/point rather than $50/point for ES, and MNQ is $2/point rather than $20/point for NQ.
Catching 5 points on MES (Micro ES) consistently every day is $25/day and $6000 a year. Even 3 points per day is $15/day and $3750/year. Similar story on MNQ.
These yearly numbers seem high from such small daily profits, but you can see from the table above these are statistical truths.
Do we see how small gains add up? Will it be a straight line up? No, of course not. But if one puts in the work, these outcomes are very achievable. I honestly don’t see how with hard work and discipline, someone can’t position themselves to find 3-5 points on MES or 5-10 points on MNQ on a routine daily basis once they have several months of simulated experience. Especially with the guidance we provide on them. I also don’t see how folks can’t benefit from my 2-4% frequent stock ideas which I issue almost on a weekly basis.
This is why I truly believe it’s no brainer to join my Community as the special offer is 300/year (until this evening) and I give pre-market plans Monday-Thursday to help folks capture such points on MES/MNQ on top of stock ideas.
Think about the value I bring. Think about what can be gained by you. I’ve designed my work to be disproportionally benefit to you.
The best news about small gains is that it is based on the concept of hard work and intense dedication to discipline.
We just need to work hard, be very consistent, and NOT be greedy. Trading/scalping is not rocket science.
We don’t need to be particularly talented at reading macro or know what the Fed is going to do. What we DO need to do is understand our mindset and our emotions.
I’m not interested in “being right” on where the S&P 500 will end the year. To be honest, I have no idea where it will end this year. That is my pure honest opinion. However, I do have a good read on what the index may do if it gets to X or Y level (especially if I’m watching it real-time). That, I am quite good at it.
There’s too much macro guesswork out there, and not enough focus on what actually matters: Price Action. All we need is a piece of it. We don’t need to capture the whole thing.
Who cares where the S&P 500 will end this year if we consistently stack points every day/every week?
People might look at my April numbers and think I must have seen a big selloff coming. No, I didn’t. In fact, I had no idea the S&P 500 and Nasdaq-100 would suffer such a massive correction in April. But that didn’t stop us from conservatively trading what’s in front of us and being UP in the month. I’m literally looking to catch a few points here and there.
All I care about is making sure I capture a number of points that make my week, my month, and then of course, my year.
If it sounds like I’ve rewired my way of thinking in trading, it’s because I have.
And I’m much more profitable because of it. Stress is way lower. Profits are way up. Time spent is way down.
What’s music to my ears every day is hearing: “Limit Sell Order Filled”.
Then off I go, done for the day.
Special Offer Link: https://larrycheung.substack.com/subscribe?coupon=ef25fa8f
Next update will be made on Whatsapp in my Pre-Market Plan tomorrow. See you inside.
7 Spots left.
-Larry
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