|
#1
|
|||
|
|||
calculating risk/reward ratio.
can anyone tell me how to calculate an individual stock's RRR? much appreciated. Thank You.
|
#2
|
|||
|
|||
Re: calculating risk/reward ratio.
Not sure how a long-term investing standpoint differs from a trading perpective, but it depends upon how much you are willing to risk.
If you buy a share of ABC at $10 and have a stop at $9, then you are risking $1. If you believe the market to have a value or target of $12, then you are risking $1 to make an EV of $2, a 2:1 risk/reward ratio on that trade. Not sure if this is what you're looking for. The Sharpe ratio may be a more suitable calculation to use, which will help you measure risk-adjusted returns. |
|
|