Here’s something I’ve been thinking about a lot lately — just because something is statistically true in the stock market doesn’t mean it’s automatically useful.
Especially when you’re trying to build a real trading strategy. Ya know, something that actually works in practical day to day trading.
Take weekend trading, for example.
For a long time, I avoided holding trades over the weekend with anything short term. My reasoning for this is very good: On paper, the risk to reward for taking on the weekend relative to the average volatility isn’t good enough. And, furthermore, I tested strategies like my Overnight Options over the weekend and determined it was better to avoid them.
Plus, Monday has been the most negative day in the stock market for over 80 years — the data backs that up. Why would you trade into that?
So I have always believed that to trade the weekend, you needed to capture the volatility in some meaningful way. Essentially capturing those “big weekend gaps” we all know about.
So, for quite a while, I have tested those kinds of strategies: low win rate, high reward type stuff. And yeah, a few of them had huge payouts… but also massive drawdowns. Not what you want to see in a consistent strategy.
Then I found something pretty shocking…
Those terrible Monday stats? They’re mostly due to just a handful of extreme days — like Black Monday, where the market dropped 19% in one session. Take out just a few of those, and Monday becomes almost… normal.
And that’s when things clicked.
If you stop trying to chase the few massive moves, and instead build in a cushion — basically, giving your trade room to be wrong without blowing up — you can dramatically improve your results. I actually found a setup that won 95% of the time since Monday expirations were introduced 🤯
That’s not the result I expected. I thought I’d find a strategy that hit 20-30% of the time but had home-run payouts. But by flipping the whole approach, it turns out the real opportunity is in fading the assumed volatility, not chasing it.
The lesson here? Don’t just accept market stats at face value. Dig a little deeper. The data might be accurate — but what you do with it makes all the difference.
If you want to hear more, I shared some details in today’s Mapping the Market class, plus we went over some of what I see in the current markets and preview the weekend as well.
Hope to see you there!
— Nate Tucci
