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Back to the Long Side

Hey, Ross here:

Hope you had a relaxing Labor Day weekend. Let’s jump right back into the trading week with another actionable trade idea.]

This time, we’re going back to the long side.

Chart of the Day

Uranium, cybersecurity, oil & gas, biotechnology, and software stocks are currently the best performers. So, I want to focus on the best stocks in those groups.

This simple process reduces 6,000+ publicly traded stocks down to a watchlist of 20-30. And that is where I focus.

Cameco Corp (CCJ) is a beautiful trending stock ripping to new highs.

I only have three words to say about this – I like it.

Insight of the Day

Your win/loss ratio is more important than your win rate.

Last week, after the selloff in NVDA stock following a blowout earnings report and an accompanying decline in the Nasdaq, I was nearly certain the market would fall further this week.

It did not. I was wrong. And, unfortunately, that is part of the game.

Trading is a game of probabilities. You are going to pick losing stocks. That’s why you should always be tracking your win rate and win/loss ratio.

Most people focus exclusively on win rate. I get asked about my win rate all the time on webinars.

But that’s only the lesser half of the equation.

I’ve seen traders with win rates over 80% that still lose money. There are charlatans in my line of work who tout huge win rates and claim to have “96% winning trades.”

Here’s the part they don’t tell you…

The other 4%? That tiny number of losing trades? They wipe out all the gains.

Why? Their win/loss ratio is horrible.

The win/loss ratio represents your edge. It is the ratio of your average profit against your average loss.

If your winning trades have an average profit of 12% and your losers average only -4%, your win/loss ratio is 3:1. In other words, you make three times as much money when you are right as you lose when you are wrong.

This is extremely important. Because your win/loss ratio dictates how often you need to win.

In the above example, a 3:1 win/loss ratio means you only need to be right 25% of the time. Every win offsets three losses, so as long as you can get 1 out of 4 right, you are not losing money. Any better than that, and your account balance is growing.

But if those numbers were reversed – say your average profit is 4% but your average loss is -12% – your win loss ratio would be 1:3. Now you need to be right 75% of the time, since one losing trade wipes out three winning ones.

That’s much harder to do.

That’s why I focus so much on win/loss ratios – and why I insist on stop losses for every trade I recommend.

And right now, I’m going LIVE to showcase a strategy that targets the highest win/loss ratios of them all…

Because it focuses on finding stocks with hidden catalysts that could deliver triple to even quadruple-digit gain.

So click here to join me in the live room now…

And I’ll explain everything.

Embrace the surge,

Ross Givens
Editor, Stock Surge Daily

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