Trading Is Not Consistent

Some traders look at wind rate as their ke metric for consistency. But it's really just one part of the profitability formula. How big are the winners, right? And how big are the losers? We know that if you're selling far out of the money options that have a low delta, or a low probability of expiring in the money, then you can have a high wind rate. The risk reward is going to be so that when the loser does come, that loser could be so big that it wipes out a lot of the winning trade. There are systems that have higher wind rates, and what happens is you tend to give up larger gains with higher wind rates.

Transcript

Play full episode

Remember Everything You Learn from Podcasts

Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.