Risk / Reward Ratio with the operation of the Pentagram
STOXX 26 May
from Gianluca Salvatori
on Vimeo .
Often indeed very often the traditional method of trading based on MarketProfile ® applied to the Volume Profile, based on a simple analysis of the areas / areas of volume, allows the identification of entry points, levels of STOP, but rarely indicate the levels of profit calculated in advance when you have to set it in operation.
This prevents this outdated method of analysis, to be able to say "statistically" as winning as any other form, in order to find success in a statistically winning sequence of operations that define the method, must allow its user to a priori to calculate the risk / return ratio of each individual transaction. E 'known fact that trading success comes from a series of operations whose result is positive, although facing in its repetitiveness, operations that can also be a loss. A method is therefore successful only if its coefficient statistic is winning, and is efficient only if the same risk exposure, I get positive results in quality.
Needless to compare two methods that achieve the same bottom line result, but they see a risk 5 to get that result, and the other risk 15 to achieve the same result. It 'clear that the latter is much less efficient than before, because it puts more risk capital to achieve the same end. Well
Also in this Pentagram demonstrates its strength and its scientific value applied, as with its level and its SD slot displacement, allows its user to know in advance always with certainty and its potential targets in relation to position of prices and therefore implicitly always calculate for each transaction, the Rick / Reward ratio. The result is then a sequence of operation where the statistic applied to the numbers in the market indirectly provides a solid and robust to the method that becomes statistically reliable as a measure to each operation. We have therefore that the methodology of the Pentagram provides not only statistical inputs supported by science, but also a statistical management indirect management of money which is then statistically reliable and measurable.
E 'can then abandon the logic of "VAI and hope it goes", without knowing a priori the possible profit but considering that only once has entered the market. Now, as is right and logical that in order to be statistically profitable, it is possible to measure the risk and opportunities before entering, thus reducing much of the losses in a statistically estimate.
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