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I have found over the years you need a probability of 80% to utilize a 1:1 return, 70% for
a 2:1 return and 60% should yield a 3:1 return. The one thing that can not be dealt with
in any method is the 3% factor. The only way to handle that is to hedge with options. It
reduces profits to a small degree but takes away that 3% factor which leads to poverty.
As for options, the returns can not be gauged in the same manner. Each strategy has a
different degree of risk and probability of success. Unlike stocks, futures and options
are time sensitive therefore are much more conducive to strategies which include a timing
tool for entry and exit. Have a good week, Ira.
r slupsky wrote:
> Jonathan Stewart Dempster wrote:
>
> > group, does anyone have any comments regarding stops and risk reward
> > ratios,
>
> Tom Joseph of Trading Techniques in their video describes a 1:1.6 with a 60% win
> percentage as a minimum. An easy rule of thumb is risk 1 to make 2. For me on
> options that increases to risk 1 to make 3-4. I figure it at a 1:2 but only risk 1/2
> of the premium so the net is 1 to 4 or so. This does not preclude the fact that
> I would take profits at any time. Things change but I am committed to not letting a
> winner become a loser no matter how small the profit.
>
> r
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