المدة الزمنية 29:23

How To Calculate The Risk Reward Ratio, Break Even Win Rate, & Expectancy of a Stock Trading System

بواسطة The Organic Chemistry Tutor

40 924 مشاهدة

0

853

تم نشره في 2020/05/31

This video explains how to calculate the risk reward ratio of a trade, how to calculate the minimum win rate or probability of winning in order to break even and the amount you expect to earn per trade on average relative to the amount at risk which is equivalent to the expectancy of a stock trading system. Premium Content: https://www.patreon.com/VideoInvestor Stock Trading Strategies For Beginners: /watch/0oyeqZTzBI7ze Call and Put Options: /watch/MZnawq3dYRGda The Dividend Yield: /watch/0qx6M1E8vQk86 Price to Earnings - P/E Ratio & Earnings Per Share: /watch/s4=t&41q_Q0L5-cA5t Price to Sales Ratio P/S: /watch/gyRVOoGj-kPjV Return on Assets & Return on Equity: /watch/8ouJ55F4BXk4J Debt to Equity Ratio: /watch/Yb5lT7Hdhnedl Liquidity Ratios - Quick Ratio & Current Ratio: /watch/gQy4skPVZmbV4 Market Capitalization: /watch/oE9P6W21Zo91P Price to Book Ratio: /watch/Y5IwdhlR7b5Rw Simple Moving Averages: /watch/AXVCCzdKtNMKC

الفئة

الكلمات

Risk reward ratio

Stock trading

Expectancy

عرض المزيد

تعليقات - 46

@

@HellcatsandTrackhawks3 years ago its crazy that all the risk/reward videos i can find like this have >50k views. goes to show you that people like you and i are going to really be successful in the trading world. best of luck to everyone. 5
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@stocks4bt3 years ago This is an excellent teacher. He shows STEP BY STEP how each step works 10
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@carcer1493 years ago Thank you so much... this Risk/Reward Ratio and WinRate was the only thing keeping me out of trade since my math is not the greatest. Thank you so much, I appreciate it...I am going for my 3rd replay of this video and gluing it on my brain... ... 11
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@emrata853 years ago Finally, someone explains this shit clearly! 9
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@huooful3 years ago Came here mostrly for expectancies but then learned the basic concepts of options as well. Wow this is just excellent content. 2
@

@GiOrDy0873 years ago This is the very ABC related to trading! Thanks a lot for this teaching 🙏🙏🙏
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@catlinhollowlast year well explained without complicating side conversations.
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@mm0dk0urlast year Thanks for such an awesome informative video
@

@Patrick-wn6uj4 years ago hey, I couldn't find a video on discrete random variables on your channel could you please do a video on that? 2
@

@yaboy03273 years ago This video is a golden resource like all the others, thanks for your commitment. But I think the explanation of profiting from puts at the end was just a little convoluted (). With the 10:1 ratio there's a high chance that you (won't) win and would need a 90% success rate for profitability. Unless I'm off base. ... 1
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@frederiksenphilip3 years ago Thank you. This is great but how do I determine the reward? What is the process behind determining this precise reward of 60 and not 50 USD? Lets say it is not going up to 60 USD which she is expecting but instead 50 USD and she sells it there her rw/r is going to change from 5 USD reward per 1 USD risked to 2.5 USD reward per 1 USD risked. Had she sold at 50 she is changing her strategy. So she must carefully have chosen the reward at 60 USD and not 50 and this I have difficulty understanding which factors dictates a resonable set reward? ... 1
@

@suiwing4224 years ago Could make a video of The Black Scholes model and Value at Risk Concept :D 1
@

@INUNDUNATION4 years ago *great! Now I can calculate how much risk is taken when robbing a bank* 2
@

@doyoarero55994 years ago please do some question about translation reflection and rotation in details sir please
@

@vincentmontero84663 years ago How do you calculate the reward? How would you know the amount of the potential reward? In your example how did you get$20 1
@

@gneyman2 years ago It's actually 300/1200, not 300/1500, as premium isn't refunded in case of call expiring ITM, the bet premium is non-refundable regardless of outcome. Pay to play.
Add implied volatility to direction & time decay as a potential headwind for options buyers (IV decline reduces option price) ...
@

@huooful3 years ago In the exampe of s call option, if the price just doesnt go to your favor so you just lose at maximum the amount you paid for the options, in this case 300$? And if it goes to ypur favor you can actually buy thosa shares so you excercising your right to buy the actual shares? Can someone tell all the possible outcomes, negatives and positives? Do you sell the option and get the shares as your own or whats happeningv ...
@

@patricioibarrag2 years ago Hi, I have a question. Imagine I have USD $1000 and I'm willing to risk in every trade 2% of my total accumulated balance. My Risk/Rewards is 1:1.5.
I need to create a market order, but I don't know how to calculate the leverage or any other variable I need to use, so I can set the order without losing more than 2% of my total accumulated balance (account).
Can you help me? ...
@

@Woodward0611 months ago Odds of winning at 1:4 RR trade is 4x less than a 1:1, which is 50%. 50%/4 is 12.5%. She is winning 15% of the time on an outcome of 12.5%. She should have an edge of 2.5%? Or am I doing it wrong
@

@tommyharris58173 years ago Good video but no one knows the risk-reward ratio in stocks 2
@

@chronicmastertrader29973 years ago Could this be calculated correctly, after the trade is complete and you know your absolute profit and loss values? Profit being reward, and loss being the risk? I'm having trouble understanding this with non-round numbers being used, or even decimal numbers. I understand it fully with the even rounded number you used in the examples. But what if I have a profit of $29 and risked $41, what is the expectancy per risk? I got $16.41. So does that mean, with this strategy, Im expected to receive $16.41 for every $41 at risk, with a win rate of 70.73% of the time? So collecting $29 is better than expected. Idk if that is right. This is why my math teacher hated me! lol. R:R of 1:.0705 and 70.73% win rate I also calculated given your instructions. Am I understanding this correctly? I'm really trying to lol. Thank you for your help, I really appreciate it. Or maybe the calculation/formula is ONLY relevant, BEFORE placing a trade and getting the profit and loss numbers? I'm trying to do it both ways but think Im just confusing myself lol ...
@

@danruben17354 years ago wouldn'it technically be risking 4,000 since that the initial investment
@

@learnerrahat53205 months ago Damn Man which skill you don’t have . Even trading 😂
@

@coldavenue23253 years ago I love your teaching, but really hate the black background. It gives eye cancer.
@

@juanmarti71463 years ago It’s so annoying seeing how slow you draw each number. Next time type it,
@

@HellcatsandTrackhawks3 years ago its crazy that all the risk/reward videos i can find like this have >50k views. goes to show you that people like you and i are going to really be successful in the trading world. best of luck to everyone. 5
@

@stocks4bt3 years ago This is an excellent teacher. He shows STEP BY STEP how each step works 10
@

@carcer1493 years ago Thank you so much... this Risk/Reward Ratio and WinRate was the only thing keeping me out of trade since my math is not the greatest. Thank you so much, I appreciate it...I am going for my 3rd replay of this video and gluing it on my brain... ... 11
@

@emrata853 years ago Finally, someone explains this shit clearly! 9
@

@huooful3 years ago Came here mostrly for expectancies but then learned the basic concepts of options as well. Wow this is just excellent content. 2
@

@GiOrDy0873 years ago This is the very ABC related to trading! Thanks a lot for this teaching 🙏🙏🙏
@

@catlinhollowlast year well explained without complicating side conversations.
@

@mm0dk0urlast year Thanks for such an awesome informative video
@

@Patrick-wn6uj4 years ago hey, I couldn't find a video on discrete random variables on your channel could you please do a video on that? 2
@

@yaboy03273 years ago This video is a golden resource like all the others, thanks for your commitment. But I think the explanation of profiting from puts at the end was just a little convoluted (). With the 10:1 ratio there's a high chance that you (won't) win and would need a 90% success rate for profitability. Unless I'm off base. ... 1
@

@frederiksenphilip3 years ago Thank you. This is great but how do I determine the reward? What is the process behind determining this precise reward of 60 and not 50 USD? Lets say it is not going up to 60 USD which she is expecting but instead 50 USD and she sells it there her rw/r is going to change from 5 USD reward per 1 USD risked to 2.5 USD reward per 1 USD risked. Had she sold at 50 she is changing her strategy. So she must carefully have chosen the reward at 60 USD and not 50 and this I have difficulty understanding which factors dictates a resonable set reward? ... 1
@

@suiwing4224 years ago Could make a video of The Black Scholes model and Value at Risk Concept :D 1
@

@INUNDUNATION4 years ago *great! Now I can calculate how much risk is taken when robbing a bank* 2
@

@doyoarero55994 years ago please do some question about translation reflection and rotation in details sir please
@

@vincentmontero84663 years ago How do you calculate the reward? How would you know the amount of the potential reward? In your example how did you get$20 1
@

@gneyman2 years ago It's actually 300/1200, not 300/1500, as premium isn't refunded in case of call expiring ITM, the bet premium is non-refundable regardless of outcome. Pay to play.
Add implied volatility to direction & time decay as a potential headwind for options buyers (IV decline reduces option price) ...
@

@huooful3 years ago In the exampe of s call option, if the price just doesnt go to your favor so you just lose at maximum the amount you paid for the options, in this case 300$? And if it goes to ypur favor you can actually buy thosa shares so you excercising your right to buy the actual shares? Can someone tell all the possible outcomes, negatives and positives? Do you sell the option and get the shares as your own or whats happeningv ...
@

@patricioibarrag2 years ago Hi, I have a question. Imagine I have USD $1000 and I'm willing to risk in every trade 2% of my total accumulated balance. My Risk/Rewards is 1:1.5.
I need to create a market order, but I don't know how to calculate the leverage or any other variable I need to use, so I can set the order without losing more than 2% of my total accumulated balance (account).
Can you help me? ...
@

@Woodward0611 months ago Odds of winning at 1:4 RR trade is 4x less than a 1:1, which is 50%. 50%/4 is 12.5%. She is winning 15% of the time on an outcome of 12.5%. She should have an edge of 2.5%? Or am I doing it wrong
@

@tommyharris58173 years ago Good video but no one knows the risk-reward ratio in stocks 2
@

@chronicmastertrader29973 years ago Could this be calculated correctly, after the trade is complete and you know your absolute profit and loss values? Profit being reward, and loss being the risk? I'm having trouble understanding this with non-round numbers being used, or even decimal numbers. I understand it fully with the even rounded number you used in the examples. But what if I have a profit of $29 and risked $41, what is the expectancy per risk? I got $16.41. So does that mean, with this strategy, Im expected to receive $16.41 for every $41 at risk, with a win rate of 70.73% of the time? So collecting $29 is better than expected. Idk if that is right. This is why my math teacher hated me! lol. R:R of 1:.0705 and 70.73% win rate I also calculated given your instructions. Am I understanding this correctly? I'm really trying to lol. Thank you for your help, I really appreciate it. Or maybe the calculation/formula is ONLY relevant, BEFORE placing a trade and getting the profit and loss numbers? I'm trying to do it both ways but think Im just confusing myself lol ...
@

@danruben17354 years ago wouldn'it technically be risking 4,000 since that the initial investment
@

@learnerrahat53205 months ago Damn Man which skill you don’t have . Even trading 😂
@

@coldavenue23253 years ago I love your teaching, but really hate the black background. It gives eye cancer.
@

@juanmarti71463 years ago It’s so annoying seeing how slow you draw each number. Next time type it,