tag:blogger.com,1999:blog-30128229.post5453391331449513639..comments2023-09-30T07:11:55.493-06:00Comments on MarketFN.com: Some Necessities of Successful TradingInvestment Househttp://www.blogger.com/profile/14771320644915759241noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-30128229.post-87364647836302450772010-04-05T08:20:05.043-06:002010-04-05T08:20:05.043-06:00Thanks for writing, LUNA. Yours are some good ques...Thanks for writing, LUNA. Yours are some good questions and comments. First, I should say that it works out that I am a swing trader though I generally have no pre-conceived notions of how long I will be in a trade other than perhaps an option expiration date (and it is rare that I am in a long option position until expiration). Instead, I let the movement of the stock take me out. My reward to risk calculation is based on the distance from my entry to my initial exit based on my exit strategy (risk) and the distance from my entry to what looks like the first serious resistance (reward). Obviously, this approach is not infallible, but it does give me a good handle on the potential. In that regard, I'm wondering how you make your determination whether a trade has a strong, medium, or weak chance of making a move in your direction. The question about how much of my capital is invested on any given day is very difficult to answer since it can vary quite widely. In a particularly indecisive market, it ordinarily would be a very low percentage, perhaps on the order of 5% to 10%. Conversely, in a strongly trending market it might be much higher, perhaps on the order of 85%. It could be anywhere in between. Anyway, hope that helps. I think I'll use your questions as a springboard for a future article. Thanks.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-46614523875869223032010-04-04T18:43:58.479-06:002010-04-04T18:43:58.479-06:00I would like to know how you quantify Reward-to-Ri...I would like to know how you quantify Reward-to-Risk ratio. It was an eye opener that a 2.5:1 ratio lets you be in the game 7 out of 10 times! That is not very apparant.<br /><br />How how do you calculate the ratio? I mean how do you determine before entering a trade that you have a 2.5 times advantage? I trade on a judgment that a trade has say, "strong" or a "medium" or a "weak" chance of making the move in my direction (long or short) but I wouldn't be able to put a mathematical number to it. How do you do it?<br /><br />Second, what percentage of your capital is invested on a given day? Typically what are the low/medium/high percentages?<br /><br />Third, do you predominantly day-trade or swing-trade?<br /><br />Finally, I believe the days of buy-and-hold are gone. There are too many Enrons, Worldcoms, Madoffs and Lehmans out there. Investors Beware - that's the mantra of today. If you go hunting big game on the plains of Africa, you can't afford to sleep on the ground. Makes sense?<br /><br />Thank you.LUNAhttps://www.blogger.com/profile/04662255032497651863noreply@blogger.com