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Strategies & Market Trends : Value Investing

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To: amoezzi who wrote (18717)2/23/2004 5:30:25 PM
From: Paul Senior  Read Replies (1) of 78746
 
amoezzi, if you are "going long a stock trade", then I assume that by "trading", you are a trader. If so, the best way (imo) to estimate risk/reward for your next trade is the historical performance you've recently experienced.

Assuming further that your previous trades and next trade are about similar as regards the amount of money bet on each trade, then your risk to reward ratio best estimator (imo) for your next trade = ratio of past total of losses ($)to total of past gains ($).

That is, for traders, I assume the best measure of risk to reward for an upcoming trade ought to correspond to what the trader's results have shown in similar past situations.

jmo.
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