Hubert Senters here.
Let’s take a look at MKC. Heads up, market’s going crazy. Dow is down a bunch. It looks like the index futures are finally deciding that they didn’t like the upside, they liked the bounce. But we still need to close. I’m doing this video right at about noon when I’m doing this.
I will walk you through how to look at a risk reward ratio. So in this case scenario I’ve got a daily chart of MKC and this is the Ube Pro which basically is a mechanical semi-automated version of how I think about how I go about trading.
I’m looking at the daily and I can clearly see that MKC, Mccormick is in a valid uptrend. I want to go long so I’m going to avoid all shorts. Now, the ADX is a little low at $18 but that’s okay, I can deal with that. It’s going towards $20 some. And then what I want to look at is that ATR based here on my entry.
It’s going to say if you go long and Iet me zoom this in. It’s telling me it’s saying hey here’s a decent entry at $124.05. If you do that your risk is going to be a $1.1 ATR so basically I’m going to be risking from $124.05 down to $119.89.
I’m okay with that amount of risk and then goes to say I recommend you take off a position here so I’m going to go out half here and then I will go out a quarter here and then I’m all at that last quarter of that run and I may use this trailing blue stop-loss at $149.
So that’s how I look at risk reward or trades and I look for valid uptrend. So let me walk you through on this one obviously target 1, target 2 and target 3 is open still an open trade in that example.
In this example, it’s a little bit different here. The average true range was point 93 acceptable to me and I just make sure that the dollar amount is $102.11 to $101.03 so I’m risking two bucks on that. I’m cool with that target 1, $106.50, target 2 $111.03 and then trailing stop-loss all we got apparent and I got a $14.4X.
So based upon the amount of risk that I took the reward I got was $14.4 X and that’s what I’m looking for then I just go back and say hey, how’s that thing been performing here, this trade target one or two didn’t get there. But the first initial stop-loss did so I lost point eight so almost $1X but not quite. And then I would just go back and look at that.
So based upon these three trades it’s performing well I would want more than that. It’s a too small of a sample size. But anyway, you get the gist. Mark Helweg is going to be doing a special webinar on ‘’How to Crack the Code of the Market Wizards for Potential Huge Gains with Limited Risk,’’ Wednesday, August 14th at 8PM EST. I’m going to HYPERLINK you to that page so you can register for that webinar.
Good luck. Hope it helps. See you on the next video.