How I Use the 3-to-1 Rule to Find Trades That Actually Work

I want to show you something I do all the time that has nothing to do with options — and it's one of the most important concepts I can teach you.

I am a trader who always wants to make at least 3-to-1 on my money. I don't take trades that are 2-to-1 setups. Why? Because mathematically, they don't serve you well in the long run. If you're only making 2-to-1, you need to be right more than 50% of the time just to stay profitable. That's a tough game.

But when you're consistently finding 3-to-1, 5-to-1, even 10-to-1 setups? Now you have a mathematical edge. You can be wrong half the time and still make life-changing money.

Let me show you what this looks like in practice with TSM.