DAYTRADING Fundamentals Message Board

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Strategies & Market Trends : DAYTRADING Fundamentals

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To: cloudless who wrote (5332)	11/11/1999 9:32:00 PM
From: Matthew L. Jones	Read Replies (2) of 18137

I would look for a minimum 3:1 risk/reward ratio (actually it should be called reward/risk). In other words, if I am going to risk one point (stop loss), then I want to see a minimum of 3 points before I run into a resistance level on the trade. Also, unless you are trading very short term (few minutes), I would always trade in the direction of the larger trend. Counter trend strategies are good for "short" term plays, but will kill you on swing trading. Also, unless you are investing, I would consider a lot smaller loss point. The guys that have studied systems say that over time, more than a 2% stop loss will eventually kill you with a series of "worse case" trades, which will eventually come. I personally like absolute dollar stops as opposed to percentage stops-- after all, it's money I don't want to lose, not percentages. Hope this is of some help. Matt

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