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AirelonTrading (November 30, 1999 at 12:00 am)
Hi Mom, you're more than welcome, and thank you for the kind comments.
The "Risk" side of the risk reward ratio is taking what I've lost, on losing trades. So take all the losses, and what is my average, actual, realized loss.
The "Reward" side of the ratio, is the profits I've won, on profitable trades.
Then you divide the two, to reach what the average ratio is.
I hope this helps!
Regards,
Dan
SoccerMom8080 (November 30, 1999 at 12:00 am)
Hi Dan,
Thank you for your excellent videos, I'm learning a lot from you.
I'm not quite grasping the way you're calculating Risk:Reward ratio in regards to Performance Analysis, can you spell it out for me?
What values are used to calculate it?
Thanks,
Mom
AirelonTrading (November 30, 1999 at 12:00 am)
I'm going to talk about this a bit more on the BlogTV show in a few hours.
1) Cluelessness. I've been reviewing headlines at the time they were released. It's laughable.
2) The Government trying to play merchant, in denial of everything that Adam Smith talked about.
VivaMydick (November 30, 1999 at 12:00 am)
I know that market is not trading on fundamentals but trading on the news and speculation .Yesterday all the news was bad and market ended up being much higher .
This stinks . How do u explain it ?
shakaama (November 30, 1999 at 12:00 am)
yay they're all down now. but i can't buy or sell now. maybe you can't day trade in the competition.
AirelonTrading (November 30, 1999 at 12:00 am)
:)
Yeah, I am rather ecclectic in my dress, to say the very least. I love that hat. My wife wants me to pitch it, but it's just getting good. All tore to pieces. :)
Not bad if that's on 4 trades. Have you checked out the charting series, or looked into technical analysis much?
AirelonTrading (November 30, 1999 at 12:00 am)
And remember, for my public trades, I keep my my risk to the $89 region right? It usually ends up being less than that. Ford trade was $57. CRBC ended up being $56. That pulled down the average quite a bit on those trades where the loss was about $86.51. So strange as it is, when I averaged those numbers all together, it lowered the average to the same as my largest loss; and thus the risk / reward turned out to 1 risk to 2.6 reward.
AirelonTrading (November 30, 1999 at 12:00 am)
I'm glad to see that you're really looking at the numbers and seeing how they relate to one another. But stop & think for a moment. Is drawdown realized loss, or unrealized loss? Unrealized right? Ive had drawdown where the trade turned around, & I ended out with a profit (For example, last years Hog trade). Whereas my reward is a realized gain.
Yeah, the 1 to 2.6 didn't seem right to myself either, but I did the math four different ways, including by hand, but it does turn out, to 1 to 2.6.
tekmnd (November 30, 1999 at 12:00 am)
Continued-
Also, are you sure your numbers are right? On average you make over 7 times the difference between your entry point and stop loss placement? Are you sure that shouldn't be "largest reward," not "average reward" on the screen in your video?
Shouldn't one have both numbers- average reward and largest reward- in their analysis?
Have a great day :)
Tek
tekmnd (November 30, 1999 at 12:00 am)
Hi Dan. I watch your vids in the middle of the night when I can't sleep. It's 2:20am here right now, so forgive me if I am not thinking this out right lol
As I watch your risk reward ratio, it seems like something is wrong. Shouldn't it be a ratio of average drawdown to average reward? (in your case 30.42/220.99 or 1 to 7.26)
I get 1 to 2.6 if I divide your largest drawdown by the average reward.
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