So let's talk about how to find
the best trading strategy.
And before we do this, let's first
talk about what is
the best trading strategy.
And before we can do that,
we need to define "best."
Is the best trading strategy
the one that makes the most money,
or is it the one that has
the most winners?
So in this example, in this video
here, I want to use The Wheel
and the PowerX Strategy
to show you exactly
how you can find the best
trading strategy.
Now, in order to do this, first
we need to define some criteria
that we use.
You know I did another video on how
to find the best broker.
And when it talks about the best
broker, it's the same, you need to
have certain criteria.
And here are the ones that I like
to use in order to determine the
best trading strategy.
So as an example, I want to know
the account size needed in order
to trade the strategy, right?
I mean, do you need a $5,000 account
or a $100,000 account?
Another thing is I want to know the
potential return of a trading
strategy. So how much money can
I make? And this is where we are
talking about the ROI,
the return on investment.
Then of course I would like to know
what winning percentage
can I expect with the strategy.
I also want to know the risk per
trade.
So how much am I risking
per trade that I'm taking?
Also for me it is important
to know the overall drawdown,
right? I mean, so what can I expect
if things go really, really wrong?
What is the drawdown of this
strategy? Also, I would like to know
the time needed to execute
the strategy, and can
I use money management?
And if so, what money management
approach is the best to use?
Again, you might have different
criteria. The important thing is
that you do need criteria.
Without criteria, how do you want
to know if a trading strategy is for
you or not?
So here's what I want to do right
now. I want to compare
The Wheel trading strategy
with The PowerX Strategy.
Both of these trading strategies
I'm personally trading on my
accounts and I want to show
you some very, very specific
examples here.
So let's get started and let's talk
about the account size needed.
For The Wheel trading strategy,
and again, if you would like to
learn more about these strategies,
I'll put a link in the description.
So for The Wheel, I have a playlist,
for the PowerX Strategy you can
either get the book that I have for
you. You can get it for free, only
pay $4.95 shipping and
handling, or you can go to
mytradingroutine.com.
Again, both links are in the
description if you want to know what
exactly these trading strategies are
because I'll explain them in other
videos in detail.
So we don't need to do this right
here. So anyhow, for The Wheel
where we are selling options,
getting assigned the stock and then
selling calls against it I
recommend that you need to have at
least $20,000.
So this is when this
makes a lot of sense.
So I personally, the account that
I'm trading here live on YouTube
it's only one of my accounts I put
$50,000 in there, so I've got
$100,000 in buying power.
Okay. For the PowerX Strategy,
you can start with as little as
$5,000 to $10,000.
$5,000 if you want to trade options,
$10,000, if you want to trade
stocks. What is the potential ROI,
return on investment?
For The Wheel it is 30%
if you're not using any margin,
and it is around 60%,
I mean, that's what we're expecting
here with a margin
account, if you're choosing a margin
account. For the PowerX Strategy,
we're looking at 60% without
a margin account, and this is why
we're looking for 100%, 120%
with the margin account.
So, as you can see, this is a more
conservative strategy,
right? 30% to 60% per
year, that's what we are talking
about, the ROIs per year.
And here, 60% to 120%,
depending on whether using a margin
account or not.
Now, let's talk about the winning
percentage. The winning percentage
with The Wheel, you see I'm
very, very tempted to say that it is
100%, but when it comes
to trading, there is no 100%.
So even though I personally
thus far, since I've been trading
this strategy, have 100% winning
percentage I want to be conservative
here and say
95%.
Because, as you know, in this show,
it's all about facts.
No hype.
Okay?
With the PowerX Strategy, you can
expect 50%.
So this means that every other trade
you can expect to be a loser.
But it doesn't matter, it still
makes money, okay?
So the risk per trade with
The Wheel, so this is where you
can expect around 5%
of the buying power.
So if you have a $100,000 in buying
power, you can expect a
$5,000 risk that you have per trade
here. With the PowerX Strategy,
it should be 2% of
your buying power. So as you can
see, The PowerX Strategy
is risking less, and if risk is
important to you, then
you know which strategy is more
suitable for you.
So what can you expect as a
drawdown? Here you can expect 25%
of your buying power.
What does a drawdown mean?
It means that while you're in
trades, your account might go down
by 25%,
okay? This is something that
can happen, you need to be prepared
for this.
With the PowerX Strategy on the
other hand, you're looking at only
a 10% drawdown.
So time needed to execute, if you
are trading The Wheel Strategy,
you need around five minutes
per day and that's all you need
realistically.
So you don't need a lot of time
here.
And with the PowerX Strategy,
you need between 15 and 20
minutes per day.
So both of them are swing
trading strategies, so they're not
day trading strategy.
So you don't have to sit in front of
your computer all day long,
which I think is great because I
don't know about you, I don't want
to sit in front of my computer all
day long.
So money management, if you
want to use money management to
really grow your account quickly
with this strategy, it is difficult
with The Wheel and here's why.
First of all, you have a pretty
high risk and you need a lot of
buying power. This is why you need
to have at least $20,000.
Here it is super easy and we can use
the fixed ratio money management
to grow your account quickly.
So if money management
and growing your account quickly
is important to you, it's this.
So here's what I want to say.
This trading strategy, The Wheel
is perfect if you are
trading for income
and we talked about it, the
difference between trading for
income vs.
trading for growth.
So the PowerX Strategy
is perfect if you
are trading for growth,
which means that you have a rather
small account that you want to grow.
Now, if you already have a $100,000
- $200,000 account, I
highly recommend that you trade The
Wheel. If you have a smaller account
use The PowerX Strategy to build
your account.
Anyhow, as you can see, in short,
there is no "best
trading strategy." There's just
a best trading strategy
for you based on
your risk tolerance, based on your
availability to trade, account
size and so on.
Does this help?
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