- Joined
- 8 May 2017
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Hi guys,
Lately I have been doing some calcs in terms of risk minimising a long position on potential breakouts. I know how to set my loss % value fairly easily and that makes sense. The part I don't quite get yet is where to set my projected price if it goes up. Undoubtedly there is a whole set of approaches to projecting future stock price. However in order to determine if a trade is worth investing in I need to calculate a risk ratio, which depends on where I project the stock to go to. Of course you could just defeat this system by saying every stock will go up 100% so that even if you have a 10% trailing stop loss, the risk/reward ratio is good, but that is unrealistic.
How do I make more realistic projections for this ratio in order to minimise the risk associated with the trade?
Lately I have been doing some calcs in terms of risk minimising a long position on potential breakouts. I know how to set my loss % value fairly easily and that makes sense. The part I don't quite get yet is where to set my projected price if it goes up. Undoubtedly there is a whole set of approaches to projecting future stock price. However in order to determine if a trade is worth investing in I need to calculate a risk ratio, which depends on where I project the stock to go to. Of course you could just defeat this system by saying every stock will go up 100% so that even if you have a 10% trailing stop loss, the risk/reward ratio is good, but that is unrealistic.
How do I make more realistic projections for this ratio in order to minimise the risk associated with the trade?
