.This is the 20th edition of the 0-dte.com podcast. I want you to get that correct now, that is 0-dte.com. Podcast.
And today we're going to talk about asymmetric risks and in particular, we're going to use the butterfly strategy as our underpinning to that. But I wanted to talk about asymmetry and what it really means to us traders.
I think most traders are not really thinking about this concept. They're more or less accepting what they have and they do have asymmetry, but it's completely not in their favor. In other words, the risk is usually large. And then what you're going after is a little bit small. And the reason why they do this is because they, accept large risk and small profits, profit potential, not small profits for the surety. Now I'm using this word very loosely, the surety, because it's, there is nothing sure about it. The surety of a high probability trade. So they say, yet, Even though they put on these high probability trades, they managed to lose a lot and they're not very probable as far as I can tell. Now, what if you could take that asymmetry and turn it around completely, do what I call the inversion of risk, where you take a small amount of risk for the probable outcome of a very large amount of profit.
That seems to make a lot of sense. And what if I said that you could do this in such a way that by doing this type of trade, that by putting on a trade that your trading platform is telling you is a lower probability of profit, because it lies! Sorry. I get excited every once in a while, your trading platform is lying to you.
The odds that it's giving you are off. They are way understated for puts. And they're slightly understated for calls. Anyways, getting off track here, back into the weeds, out of the weeds Ernie. Your trading platform lies. It cannot take into account all of the myriad of other factors and things that you do to make it a more profitable or more probable trade.
And that's what we. What I'm saying is that by relying on the statistics, like most traders think that they should, they think that's good stuff. Let's put on a highly statistically probable trade and we'll make millions because all the odds are in our favor. If we do enough trades with the law of large numbers, we will become successful.
Yet... 98% of you are frigging loser. You ever think about that? Oh, then there's the excuse that maybe it's the psychology. My psychology was off. I was in a dark place and I wasn't following. I wasn't disciplined enough. All bullshit. The problem is that you're trying to use the odds in your favor because you think that's the right thing to do.
Cause that's what they tell you to do. Getting back to that old broker narrative again, that's what they tell you to do because they want you to create a lot of transactions.
Again, Ernie getting into the weeds, get out of the weeds Ernie, alright.
Asymmetric trades. An asymmetric risk is the idea of taking a small risk and produce a comparatively large return. That's generally what it is. Now. This is a mind blowing concept in you're trading and it will transform your trading career.