Location: This meeting will be conducted on-line, via Zoom. Registration will be required. You may register by clicking here.
"RISK vs REWARD", the corner stone of trading, is an essential principle that must be understood and obeyed in order to be a successful trader. Do you know exactly how much risk you are taking in each trade in each strategy you are trading? Do you have a good idea of the reward associated with each trade? Do you have a defined goal for each trade? If you don't have a goal before you enter a trade, how do you know when you have reached it?
This discussion will focus on:
1) Defining the risk in a trade
2) Provide you with a few different ideas about how to set profit targets, "reward"
3) How to determine the probability of success for your strategy, and how you can find the win/loss ratio that will help you define your Expected Return, and thus set you up for success
4) A detailed discussion about Expected Return, a principle used in all risk/reward analysis; determining your Expected Return for a trade is potentially the most critical determining factor to decide whether you should use that strategy, or make the trade in the first place
5) A quick and dirty way to estimate option pricing into the future to help with the reward calculations
Hopefully, after we discuss how to evaluate our trades this way, it will help us to get a realistic picture of our overall potential trading success.
Tom Mayes is a professional photographer, running his own company for almost 30 years and has worked for himself for his entire adult life. His first career was as a professional poker player, where the risk/reward relationship was the entire consideration for every decision every day. After blowing up an account in 2009, he took some time off from trading to review exactly what went wrong. Four years ago he entered the market again with a renewed dedication to become a professional trader by applying the same risk/reward considerations that made him a successful poker player all those years ago. Tom has a BA in Business from the University of Montana.