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Registered User
Joined: 7/17/2005
Posts: 11
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I'm sure that someone has already asked if there is a way to set up a condition that will filter out all stocks in a scan that do not meet at least a 2:1 reward to risk ratio. If not, is this something that can be done, and if so, what would be the best way for me to go about creating it?
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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How do want to measure risk to reward?
- Craig
Here to Help!
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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As far as I know, there is no commonly accepted formula for the reward to risk ratio as would exist for an indicator like Bollinger Bands. The trainers cannot give settings, interpretation or investment advice. You will need to define how you see risk and reward for us to determine if a formula can be written based on your definitions. You may wish to review the following:
Risk Reward Ratio PCF
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 7/17/2005
Posts: 11
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I would like to filter out any stock that doesn't reward me with at least $2 for every $1 that I risk. I am looking to add this condition to a backscan that I use which identifies pullbacks and then will only enter a trade if the prior day's (range) bar represents a 2:1 ratio away from my target price. So, for example, I would use the high of the pullback which started 3 - 5 days ago, as my target price. Then after price has pullback to some level of support or a moving average, I want to enter the trade if price goes above the high of the prior day, using the low of the prior day as a stop-loss exit.
High from 4 days ago was $48 (target price),price pullbacks over the next few days and yesterday's high was $46 with a low of $45.
The reward would be $2: ABS(Target$48-Entry Price$46)
The risk would be $1: ABS(Entry$46-Stop-Loss$45)of prior day
I would like to enter a trade on the next day if price goes above $46.01.
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