Actual Risk Flashcards
Only take a trade if the the Traders Equation is Positive
(Probability of Success) x (Reward) > (Probability of Failure) x (Risk)
Only take a trade if the the Traders Equation is Positive
(Probability of Success) x (Reward) > (Probability of Failure) x (Risk)
In theory for me to enter and take the trade the size of my profit target has to be greater than the size of my risk and also their has to be a better probability of my target being hit before my stop is hit. This is an excellent traders equation. A Reward of 2x Risk always results in a positive Traders Equation
In theory for me to enter and take the trade the size of my profit target has to be greater than the size of my risk and also their has to be a better probability of my target being hit before my stop is hit. This is an excellent traders equation. A Reward of 2x Risk always results in a positive Traders Equation
They’re many choices for an Initial Stop - Price Action Stop/ MM Stop/ Money Stop to name a few (see chart below)
They’re many choices for an Initial Stop - Price Action Stop/ MM Stop/ Money Stop to name a few (see chart below)
When is a Stop Location Placement clear?
After a BO and follow-through or after a strong BO to a new high the Stop location Placement become super clear
There is Initial Risk and Actual Risk. Initial Risk is the stop I use before I identify what the smallest stop was that I could of used before the market went my way
There is Initial Risk and Actual Risk. Initial Risk is the stop I use before I identify what the smallest stop was that I could of used before the market went my way
There is Initial Risk and Actual Risk. Initial Risk is the stop I use before I identify what the smallest stop was that I could of used before the market went my way
There is Initial Risk and Actual Risk. Initial Risk is the stop I use before I identify what the smallest stop was that I could of used before the market went my way
Note: Actual Risk = Distance to Perfect Stop
Note: Actual Risk = Distance to Perfect Stop
When do I know my Actual Risk?
After the Market goes my way I than will know my Actual Risk
Computers Often Use Actual Risk to Take Profits
Computers Often Use Actual Risk to Take Profits
Profit taking at 1x and 2x actual risk causes PB. PB tells me that computers are taking profits. Since profit targets lead to PBs, they are resistance levels in a bull trend (a sell off when bulls take profits) and support in bear (bounce when bears take profit)
Profit taking at 1x and 2x actual risk causes PB. PB tells me that computers are taking profits. Since profit targets lead to PBs, they are resistance levels in a bull trend (a sell off when bulls take profits) and support in bear (bounce when bears take profit)
Taking Profits Based on Actual Risk
Taking Profits Based on Actual Risk
Taking Profit at 2x Actual Risk is ALWAYS REASONABLE MATH as 90% of Bars are in a Channel or TR so taking profit at 2x initial or actual risk always results in a Positive Trader’s Equatio
Taking Profit at 2x Actual Risk is ALWAYS REASONABLE MATH as 90% of Bars are in a Channel or TR so taking profit at 2x initial or actual risk always results in a Positive Trader’s Equation
Buy Strong BO
Big Bar so climax and a wide stop is needed
Actual Risk is from Entry Price to below bottom of Bull Leg
*Market failed to reach Target as there was a DT Wedge top telling me the premise has changed and it is time to exit longs below a bear bar since 2nd entry sell signal
Buy Strong BO
Big Bar so climax and a wide stop is needed
Actual Risk is from Entry Price to below bottom of Bull Leg
*Market failed to reach Target as there was a DT Wedge top telling me the premise has changed and it is time to exit longs below a bear bar since 2nd entry sell signal
Losing Position there is many ways to Scale In (Could Scale In @ 50% PB or TBTL)
*Many Experts would usually not hold through this deep of a PB. If your Plan is Failing GET OUT
Losing Position there is many ways to Scale In (Could Scale In @ 50% PB or TBTL)
*Many Experts would usually not hold through this deep of a PB. If your Plan is Failing GET OUT
Scale into Losing Position- Exit Breakeven on 1st Entry
Scale into Losing Position- Exit Breakeven on 1st Entry
Basic Rules - Position Size
Basic Rules - Position Size
Basic Rules - When to Add
Basic Rules - When to Add
Your Goal Depends on Strength of the Trend and PB
If the PB is Deeper Than Expected - a TR is More Likely
If the PB is Deeper Than Expected - a TR is More Likely
2nd Entry Should Be at Least a Scalp Away
2nd Entry Should Be at Least a Scalp Away
Size of Position - Base It on Typical Risk
Size of Position - Base It on Typical Risk
“Skunk” Stops - Exiting in the Middle KILLS YOUR ACCOUNT. Do NOT just stick a Stop somewhere because you Cannot Take the Pain anymore; this is a losing Strategy.
“Skunk” Stops - Exiting in the Middle KILLS YOUR ACCOUNT. Do NOT just stick a Stop somewhere because you Cannot Take the Pain anymore; this is a losing Strategy.
