jrodri24
How do you come up with the reward to risk ratio? Is this by previous measures move or by how much is left for the price to come back up to the previous high? Is it different for every stock? Just would like to know so as to know when the price has exceeded the appropriate ratio.
Quote 0 0
AbovetheGreenLine
Reward / Risk is based on your estimates on how high the Investment could go on the move, compared to how much it could drop:

A: If the Reward / Risk is not 2:1 or better we will not log the trade (or count it in our Performance Record). Some members want to see every mechanical Money Wave Buy Signal,  but the Money Wave pops are usually only good for 3-6 % in the Short Term. If a stock is already up >3%, we will normally Not Log the trade.

If you Buy an Investment at $12, for a re-test of Highs at $14, the Reward potential could be $2, or 16.7%. If you have a Stop at $11.5, you are risking $0.50.
So Reward / Risk is $2 / $0.50 = 4:1 odds… EXCELLENT!

Good trading, and tell your friends!
Quote 1 0