LindyBill's Ballroom Message Board

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Strategies & Market Trends : LindyBill's Ballroom

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To: LindyBill who wrote (81)	10/2/2001 3:35:48 PM
From: OZ	Read Replies (2) of 248

I shorted 4K shares of Brocade at 13.45. Placed an order to cover at 13.15, with a stop at 14.45 Lindy, On 4000 shares your pre-defined risk is one point or $4000.00. You pre-defined reward on .30 down movement on the stock is $1200.00. That is an extremely extremely low Risk Reward ratio for even the BEST trader on earth. It is a .3/1 risk reward which IMO should be a minimum of 2/1 ! Below is a spreadsheet calculated Risk/Reward table that shows various percentages of trading accuracy on the left and the corresponding average profit of loss per trade based on stated accuracy. It is based on a $24.00 round trip commission. If you are an 80% winning trader that uses the R/R of the trade you outlined you will average a profit of only $136.00 per trade. I do not think it can be done and especially by someone that was a long term buy and holder and is now doing some short term trading for a bit. Hope this helps, Oz Your Ave. Win/Loss Win % In Dollars Per Trade 30 -$2464.00 35 -$2204.00 40 -$1944.00 45 -$1684.00 50 -$1424.00 55 -$1164.00 60 -$904.00 65 -$644.00 70 -$384.00 75 -$124.00 80 $136.00 <---You have to win 80% of the time to average this much profit per trade after losses.

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