Calculating Reward & Risk
Swing Trading the Stock Market
Ryan Mallory
4.7 • 828 Ratings
🗓️ 31 January 2024
⏱️ 17 minutes
🧾️ Download transcript
Summary
Ryan discusses how he calculates the reward/risk ratio on each of his trades and how he goes about determining the potential reward scenario, and what impact it has once in the trade.
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Transcript
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| 0:00.0 | Using my Berkeley Card Forward Credit Card to pay for the stuff I need now |
| 0:03.2 | could help build up my credit school for the day I need something bigger. |
| 0:06.5 | So buying a set of headphones, or waits for my workout, smashed it. |
| 0:11.4 | Could help in the future when I want to rent my first flat share. |
| 0:15.4 | Now that's forward thinking. Check if you're eligible at barclaycard.cote. |
| 0:20.4 | 33.9% APR representative variables subject to application financial circumstances in borrowing history, T's and Cs apply. |
| 0:26.6 | Responsible use of a credit card can help build your credit score when you pay on time. |
| 0:29.6 | Hey, I'm Ryan Mallory and this is my Swing Trading, the Stock Market podcast. I'm here to teach you how to trade in a complex, ever-changing world of finance. Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading and most most importantly, to let those winners run wild. |
| 0:55.7 | You can succeed at the stock market, and I'm ready to show you how. |
| 1:00.0 | Hey, everybody. This is Ryan Mallory with Swing Trading the Stock Market. |
| 1:03.9 | In today's episode, we're going to talk about calculating risk and reward and all of our trade |
| 1:09.2 | set up. So today's email comes from a person. He recently |
| 1:12.6 | joined the SharePoint or Trading Blog. And he had a question about one of the rules. It was rule |
| 1:18.0 | number four. And on my Discord, I have like 18 rules that I'm pretty passionate about when it |
| 1:24.2 | comes to my trading, a lot of dues and don'ts. And number four is I will pass on any trade setup that doesn't offer me a solid reward |
| 1:33.4 | for the risk that I'm taking, a minimum of two to one. |
| 1:37.1 | So the question here comes from a guy, and we're not going to use his real name. |
| 1:41.8 | We're going to call them Mabel, good Florida redneck name Mabel. |
| 1:46.9 | And Mabel asks, how are you calculating a risk reward ratio? Now, you can call it risk reward |
| 1:52.7 | ratio or you can call it a reward to risk ratio. I tend to call it more of a reward to risk ratio. |
| 1:58.3 | And why is that instead of risk reward? And it's for the simple |
| 2:01.2 | reason of when I talk about the reward risk ratio, I say, oh, it's a three to one ratio, |
... |
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