I took today off (and tomorrow, as well). Zoomie traded, though, and had a nice strong finish for the week. He traded Varian Semiconductor (Nasdaq: VSEA) for 2.63R. Here’s the chart with his comments:
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| VSEA |  |  |  |
December 22nd, 2006 at 6:47 am
Sweet! Good to see those R’s rolling in!
December 22nd, 2006 at 6:48 am
nice trade
December 24th, 2006 at 2:44 pm
How do you calculate the risk and R figures? I had thought R was some percentage, but sadly cannot back into it.
thanks!
December 25th, 2006 at 6:37 pm
Scott,
R is calculated by (long trade):
R = gain / risk
= (exit price - entry price) / (entry price - initial stop loss)
= (44.87 - 43.87) / (43.87 - 43.49)
= 2.56 R
I trade .67% of my account each trade, so my profit was:
profit = R * amount risked
= 2.56 R * .67%
= 1.72 %
My account balance went up 1.72% minus commissions. If I were risking 1% of my account per trade, I would have made 2.56%. If I were risking $1000 per trade, I would be up $2,560. Hope this helps.
December 25th, 2006 at 6:41 pm
Oops, that should be 2.63 R.
December 26th, 2006 at 2:50 am
I knew it was going to pop! I knew it!
:)
Congrats!