Ever wonder why a 1:3 Risk:Reward ratio is so prevalent as a rule of thumb? Ever since I’ve been reading about day trading, I’ve heard people say they ideally look for at least a 1:3 ratio, even they’ll settle for 1:2. In this article I’ll talk about how you can derive this value from the expectancy equation. Further, I’ll show how you can predict what kind of Risk:Reward ratio … [Read more...]
4 Steps For Back Testing To Jumpstart Your Day Trading
Back testing is a necessity for anyone day trading a strategy and is serious about this business. If you have experience in trading then you will have learnt a lot of stuff along the way but by planning and having confidence in your strategy can make a huge difference to your bottom line. It can be the difference between a healthy account and one that is often on margin … [Read more...]
Are You Over Trading?
As the name suggests, overtrading is simply a situation when you are day trading for an extended period of time. This is usually a case when a person makes profits on a continuous basis. It is in these times that you tend to get carried away. With a flush in success, you may not realize that you could lose everything, as a result of excitement which leads to overtrading. The … [Read more...]