TRADING TIPS

How to Figure Out How Long it Will Take to Get There

Hubert Senters here. Got another question from Dan here on the calculation I think of ATR. And I think Dan I don’t remember your first question just because I guess there are so many. And I’m not being rude. I just get a lot of them. And I do a lot of videos. And sometimes I get confused on what question I was answering. I believe I remember what yours was. About calculating a target and trying to back in to the way of how many days that will take place. I’m going to go under the assumption. And heads up, you know what happens when you assume thing so probably I’ll make an ass out of myself here. But I’m going to assume that. I’m going to do it in a simpler example. So there’s a couple of things that we have assumed. Number one I find a valid up trend or down trend in something. And then it’s going to kind of continue doing the same price action it’s been doing for the past two weeks. So what I’m going to do and I’m going to try figure out. I always like the risk one to make three, four, five or ten, something like that. Multiple of many more than I’m risking. So in this example, I’m going to do a risk reward lesson and also how many days I think it will get there. So in CME first I figure out like how much am I going to risk. So if I figure out how much I’m going to risk. Let’s pretend we’re long at $209 at the close of the day. I would first go. I’m going to use this yellow line at $199.41 to be my potential stop. So that would be that amount of risk right there. Now, if I know that I’m long here if I’m going to risk, this is my risk right there. That’s one bucks of risk. And If I know I’m long at $209 I know I need to have a multiple of that so what I would do is I would say ok, that’s one to one ratio. That’s about one to two and that’s about one to three. In other words that box right there should fit into that. Potential target about three times. So that’s how I would do the risk reward ratio. Now, let’s just say that I’m not going to use that risk reward ratio. I’m just going to say I’m just going to get long and I’m going to use a stop of whatever you’re using. Let’s say that I want to know when I think that CME is going to hit $225. It’s still trading at $209 right now. So what I would do is I would go right click. I would go insert analysis technique. And I would look for average true range. And I would hit ok. Now, my average true range is going to be set to 14-period since I’m looking at a daily chart. That’s 14 days back. And that average right now is saying $5.94. That’s close enough to $6. I’m going to round up to $6 so in other words this is telling me that the CME on average over the past 14 days has moved about 6 bucks a day. Now, it’s not that exactly because you can see over the past 14 days. It’s been slightly higher and lower. You can pick whatever number you want. You could say 6. You could say 5. You could take the average of that. But this is the average true range for the past 14 days. So I’m just going to $6. If we want we can make it easy and say let’s take a little bit heat off that and say $5 because $5 will be easy math for me. Then what I’m going to do is I’m going to go ok, it’s $209. $209 is my entry. What I would do is I would take my target which I just randomly grab up $225. I’m going to say $225 minus $209 equals $16. Now, I’m going to say it’s trading on average about $5 a day. I’m going to take $16. I’m going to divide that by $5. That’s 3.2. In fantasy land this thing will hit that 3.2 days. Heads up, the markets don’t go straight up. It don’t go straight down. It moves in. It wiggles in both directions. And sometimes it will do the sideways shuffle. So I would say then you have to multiply. If everything moves perfect in a perfect world and nothing is perfect in trading ever. It will take three days to get there. But what you would do is ok, what’s the market structure right now? Is the market little volatile? is it just going up? Is it pulling back some? And you have to figure that into your calculation. So I would say I would multiply that times two or three. So I would say let’s say three times three. It’s going to take about 9 days to get there. And that’s how I figure out about how long it will take to get to $225 if the market helps cooperate a little bit. Steven Brooks is doing a special webinar on ”How To Win Up To 82.46% of Your Trades Using A GPS.” I have seen the product. It is a really cool, simple and effective product I think you should check it out. So click the YES! RESERVE MY SEAT NOW! And that will register you for the webinar. Hubert.  

1 Comment

  1. Hicham

    Would like more info

    Reply

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