Day Trading Futures R VS P

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Day Trading Futures R VS P

Part 2 of our discussion … yesterday we talked about defining your “R” or as Dr. Tharp calls it 1R.

Today, we continue our conversation taking into account the concept I call, R VS P. In other words, Risk Versus Profit.

In the book, Trade Your Way to FInancial Freedom by Van K. Tharp on page 88, Dr. Tharp states most traders look for a 3R profit target.

But, I believe you should not call it R(isk) … but call it P(rofit). And you should make sure you are not going for a 1:1 Risk to Return on any trade.

In other words, if you are willing to risk 20 ticks per contract, then you want to get more than 20 ticks on any trade you put on … (as a measure of an average profit level).

If I can answer any questions concerning my concept of R VS P, please let me know.

Good Trading,

Dave Knight
TradeCraze

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