If you could see .20 - .80 cents moves in stocks ahead...

[BakedWafer]

If you could see .20 - .80 cent moves in stocks ahead of time and have a certain exit point, could you make a decent amount of money?

[helenquenet]

It's going to depend on how much downside risk you accept on each trade. If you are risking 0.5 to gain 0.2 then you'll lose overall unless you also have a very high percentage of winning trades.

[DuaneG]

Hi BakedWafer,

Helen hit this one on the head. Having good risk to reward structure will keep a trader in business for many, many years.

"Rules without enforcement equals no rules."

[cpatte7372]

Duane,

Would you happen to know where we can get information on assesssing risk/reward ratios?

Cheers

Carlton

[FibbGann]

Cpatte:

I have this one Nailed!!!! 8.43 out of 10 is my percentage on this!
Its all about what you put into learning the market!

Fibbgann

[helenquenet]

Hi C,

If you want to read something that goes in some depth into expectancy/risk etc then read Van Tharp Trade Your Way to Financial Freedom. Most of it you won't need on a day to day basis but it's a book worth keeping and dipping into when you need to make sure you are on the right track.

[DuaneG]

Hi Carlton,

There are lots of articles dealing with risk/reward ratios. Quite a few of them simply provide boring explanations of how to calculate such a ratio. In my opinion, learning the principle behind the risk/reward ratio is the key. I came across this article titled What Reward-To-Risk Ratio is right for you?. It is fairly short, but this is something that is absolutely crucial to being a successful trader. Different traders run different ratios, so you must look at your individual trading style and goals to determine what numbers are going to help stack the odds in your favor to ensure long term success in the markets. Hope this helps.

[cpatte7372]

Duane,

That article is exactly the kind of thing I need.

Thanks a lot mate.

Carlton

[cpatte7372]

Hi Duane,

I also understand that its possible to use esignals backtesting facility to determine risk/reward levels. I was wondering if you could point me to some examples.

Cheers mate

Carlton

[DuaneG]

Hi Carlton,

I assume you are referring to back testing risk/reward ratios via EFS. This is possible, but keep in mind that whatever EFS study you choose to back test needs to have clear buy and sell signals written in the code to generate a good profit/loss analysis. I would also take a look at the following thread and perhaps consider experimenting with Garths riskreward.efs. I'm not sure how this script could be implemented into the back testing feature, but regardless, it's a pretty handy tool. I'm still looking for some other examples for you, but if anyone has any comments or suggestions regarding this, please feel free to contribute. Thanks.

[BakedWafer]

Just wondering cause I backtested an Automated EFS QQQ Strategy and it gained 31% in 5 months, so now I have to do some realtime testing.

[cpatte7372]

Re: If you could see .20 - .80 cents moves in stocks ahead...

Originally posted by BakedWafer
If you could see .20 - .80 cent moves in stocks ahead of time and have a certain exit point, could you make a decent amount of money?

The question is "how could you see .20 - .80 moves in stock ahead of time"?

Carlton

[BakedWafer]

It's an EFS study I am doing that autotrades based on a certain set of indicators, I've backtested it and it shows gains aroun 30% every 4 months. On to the real testing, I guess.