Risk to Reward Ratio is the key to constant wins at tradingI love writing those articles on my Blog, mainly because I learn from reviewing my trades & secondary for the value it gives back to the trading community.
I been preaching Trading is simple but not easy. It is based on following a winning trade plan. & how do you find such a plan? Try & fail, Try & succeed there is no other way. There is the possibility of a generous soul teaching how a winning strategy & thats what I hope to do in this article. I will share 2 rules
Rule number 1 Always trade the bigger picture.
Find out what the bigger picture chart is doing & trade based on that. In this trade am placing my trade decision in the (W) chart the top chart in white. My bigger picture chart is the monthly (M) not shown. And the chart I use to time my enter & exit is the Day chart (D) below in Black
Rule number 2 Risk to Reward ratio,
This should be rule #1 but I placed it as number 2 to add importance to the rules of trading the bigger picture. Aim for a Risk to Reward ratio of 3 to 5. This means you asses the Risk (how. much money you can loose) before you asses the Reward (how much money you can win).
In this trade, the bigger picture chart (M) is in a downtrend. The trading chart (W) comes into untested Supply Zone (SZ) with a Risk of less than a dollar. I take my SHRT in the red Circle
The reward is 4-5 dollars per share, mostly due to a price free fall zone, with little Demand zone (DZ) to challenge the price. I took profit at two point marked by the red X in the Daily chart.
There are odd enhancers as to why I took this trade, but they are outside the scope of this blog. If you like to learn more about my winning trading strategy that I been practicing for 11 years. Follow my Blog & learn to trade smarter.
