For active traders anticipation gives you good risk reward | stockbee

9/06/2017

For active traders anticipation gives you good risk reward


Let us look at NVDA trade recently.
Because it was in anticipation watchlist and I had orders ready for entry , the entry was very close to breakout.
Entry= 166.53
Stop= 166
Exit at 171.2
Risk = 53 cents per 100 shares
Profit = 467 per 100 shares
Reward/risk= 467/53= 8.8

So even though the trade in % term made only 2.8 in R/R term it was 8.8 times risk trade.

How many of would you like to find and trade setups where your risk /reward is 8 times plus.
Anticipation allows you to do this. That is why your first priority setup should be anticipation. Better job you do of anticipation better will be your risk reward.

Risk= entry-stop

The closer you can keep your stop to entry better it is.

On lower price stock you may not be able to get very close stop even with anticipation but on higher priced stocks anticipation can give you extremely close stops and the R/R can work in your favor very quickly.
Think about this  if you are full time active trader.

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