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Proverbs 16:9 (ESV) ... The heart of a man plans his way, but the Lord establishes his steps.


Reward versus Risk
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JimDean
Posted 2/3/2014 3:50 PM (#5647)
Subject: Reward versus Risk



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I posted a question in the webinar window to ask the two Ryan's whether they were using some (discretionary) means of considering Reward vs Risk (RR) for a trade, BEFORE taking the trade. That is, RTX3 offers a lot of signals, and during the Live Trading Lab (LTL) they decide which ones to take and which to ignore ... I wanted to know if Rwd/Rsk was part of the decision process.

I clarified the question by suggesting maybe eighths or fibs or resistance lines might be part of the Reward eval, just to be sure that they knew what I meant ... I would presume that the RTX3 Trade Plan's fixed-Risk would define Risk.

I was told RwdRsk was not part of the decision-making process of either of the two presenters during this LTL, but I was free to make a suggestion that it be part of some future LTL focus. Also, I was told that Jeff and Jeremy came up with the trading plan that they are using now. I'm not sure what that had to do with my question ... but that makes sense, since they said the RR was not a part of their discretionary thinking.

I suspect/hope that as the LTL continues, the presenters will learn how important RR is to successful trading, along with position sizing ... I probably should have asked about that as well, but I did not want to "pick" at them too much :~) ... maybe one of y'all could ask them questions about:
1. how they size their positions, and how that might vary based on volatility or price of the stock or market direction
2. whether they try to maintain a "balance" of short and long positions, in relation to current market conditions
3. how they might adjust the trade plan exits for varying volatilities or market conditions
... and whatever other money-management & risk-control things that would be "outside" the scope of any particular N plugin, therefore presumably a "discretionary management" process. If you find out more about how they (N) want to "teach" those procedures, please post what you learn in ANOTHER, appropriately named thread ... thanks!

My personal opinion is that RR and position sizing, plus robust exit management, are critical components of successful trading.

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