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To tell you the truth I still don’t understand the Risk – Reward Ratio.

Can you please give an example of this in a trade i.e. if trading EUR/USD how to apply this in a chart?

If you can show this in a chart that will be great.

Thanks

Power Course Instructor’s Response:

Sure…

Keep in mind that a Risk Reward Ratio is nothing more than where you place your stop and limit relative to your entry. For a 1:2 RRR, whatever amount you are risking based on your stop placement, double that amount and set that as your limit.

Take a look at the 1 hour chart of the EURUSD below…

Let’s say that we entered the trade right now. Based on this chart, that would be at 1.4697. A prudent stop could be placed at the point on the chart labeled stop…roughly at 1.4640…57 pips below our entry. We double the 57 and we have 114. So we would add 114 pips above our entry and we would have 1.4811…roughly the area where we have our limit labeled on this chart.

For a 1:2 RRR, it all boils down to seeking to gain twice the amount we are risking on a trade.

Source: Post of the Day: Risk Reward Ratios

1016 or 1121 on the S&P?

greenewable — Tue, 04 Aug 2009 02:33:32 +0000

The S&P 500 closed today above the psychologically significant 1,000 level, the first time it has closed above 1,000 since just after Lehman failed in October 2008. Today’s market action surprised a number of people who were expecting at least a day’s reprieve from last weeks run up for month’s end.

It’s anyone’s guess where this market will go, but for those who beleive in technicals, I have pasted a Fibbonacci retracement from the market high in 2007 to this morning, before the market broke 1,000.

S&P 500 Retracement 2007-Present

The retracement shows significant resistance ahead at the 38.2% level which is equal to 1,016 on the S&P. If that fails to turn this market back down, 1,121 (a 50% retracement) will likely mark the end of this bear market rally. Enjoy it while you can, and don’t forget to take some profits!

Update: Will Mike Abramsky raise his Apple (AAPL) $70 price target?

Dan Butterfield — Fri, 03 Apr 2009 01:22:33 +0000

Update – May 09, 2009: Royal Bank of Canada (RBC) analyst Mike Abramsky reached out to Fortune Apple 2.0 columnist Philip Elmer-DeWitt on Friday to offer up a bit of a mea-culpa for his “country mile” miss on Apple’s (AAPL’s) share price movement. On January 18, 2009 Mike Abramsky placed a sell recommendation on Apple with a $70 price target. AAPL at that point in time was trading at $82.83. As of Friday (5/8/09), Apple (AAPL) was hovering near $130 per share … some 60 points above RBC’s original target price.

Read Mike Abramsky’s mea culpa here > via Fortune Apple 2.0. NOTE: Mike Abramsky saw the bright “wrong way” sign and has changed course. He recently raised his Apple (AAPL) price target twice - now at $165. Read below …

Update – April 23, 2009: It happened! I know I shouldn’t be enjoying this so much. But we have to smile just a bit. We have our answer to the poll above! “Whoops! Did I say $70? I meant $170! My bad.” Yep … Today Mike Abramsky raised his Apple (AAPL) price target from $95 (was $70 just days earlier) to $165!

Update – April 20, 2009: Pigs are indeed flying. Mike Abramsky has raised his Appple (AAPL) estimate. A whopping $25 but still some $25 below the current AAPL price (120 today). Excerpt from Barrons: 04/20/2009 “RBC Capial’s Mike Abramsky keeps his Underperform rating, but ups his target to $95, from $70, to reflect “peer multiple re-valuation.”

April 3, 2009: RBC wireless analyst Mike Abramsky recently raised his price target for Palm (PALM) and Research in Motion (RIMM) and can’t seem to appreciate Apple’s (AAPL) ability to defy his lowered price target. On January 18, 2009, when Apple (AAPL) was trading at $82, Mike Abramsky lowered his target on AAPL to $70 and just two days later substantially raised his price target on RIMM (then trading @ $51 give or take) to $75. Today (April 2) RIMM is up nicely after good earnings* (hovering at $59 after hours) and AAPL is trading after hours at $115. Nice going Mike … you’re up $8 bucks on RIMM … finally! I only hope RBC’s clients did not short Apple. If so they’ve now lost $33 per share on that trade.

For the record … The iPhonAsia editor is long Apple (AAPL) and has doubts over the integrity of Palm’s IP claims and ability of Research in Motion to gain marketshare vs. iPhone … In other words, iPhonAsia holds the exact opposite views as RBC’s telecom analyst Mike Abramsky. Read > HERE and watch video > HERE

To the Moon Alice!

*Research in Motion (RIMM) warned a few weeks ago and lowered the bar substantially … today they came in with earnings above the “lowered” bar. The Street reacted favorably and RIMM moved up nicely in after hours trading. Congratulations to RIMM shareholders. I hope RIMM and AAPL rocket to the Moon!

For more background see >

Guessing which way prices move is only half the battle

teamlram — Mon, 16 Mar 2009 14:57:29 +0000

Most people visit trading blogs to get tips and advice. I don’t have tips & advice

S&P 500 Tea Leaves

greenewable — Sun, 23 Nov 2008 18:14:59 +0000

Another poor attempt, by me, at reading technical tea leaves.

White line below would be a test of secular bear market lows back to 1982 at approximately 700. Red line represents long term, historical highs without the cheap credit and leverage of the 1990’s and 2000’s. Green line (approx 950) is a guess at a likely best case high in the near to mid-term. I’m willing to bet that we will at worst be trading in a range on the S&P 500 between 700-950 for the better part of the next few quarters, unless something extraordinarily good or bad happens. Citi?

S&P 500 Chart 11.28.80-11.21.08 Monthly

Research In Motion - Price Target

kanadianbakin — Tue, 22 Apr 2008 09:52:04 +0000