that is why we do not buy that stock...
from 160 target is 180 (profit of Rs.20/- ) and SL is 138 (loss of Rs.22/-) ...
any buyers for BOC...
all the best
kam
Hello Kam,
I can understand your concern. The reward risk ratio in the above call is almost 1. And normally it's advisable to have a reward risk ratio of atleast 1.50 or 2 or more...But that is not always the case if you want to be a bit agressive in trading. Normally, my stop loss levels are just a safety net, and not actually a stop that stay's put till the target is achieved.
Obviously, you are not aware of the basic rule to be followed when executing my calls. Infact, it's the most important rule...i.e. a trailing stop.
I strongly recommend to keep a trailing stop @ cost when the gain is 5%+. So in that case, when BOC reached 168, the stop would be at the entry level i.e. 160. Now, you would be targeting 20 rs. and risking
NOTHING.
Now the reward risk ratio is 20 (logically it cannot be calculated coz your risk is zero). If you trade 100 times, and 50 times if you have a reward risk ratio of presumably 10 or 20 which is acheived, and 50 times you lose the trade where your reward risk ratio is 1, you would yet end up in a lucrative position by the end of the year.
Plz refer to the chart for reference to decide whether it would have been a wise decision to enter the stock or a foolish one.
I'm just trying to clear your doubt and in no way trying to offend you. If I did, it was unintentional.
Regards,
Jai Shewaramani