WY-06-26 / 09
Connecting Target Estimates with Actual Trading Risk
Decisions, Execution & Validation
Lesson / WY-06-26
The P&F target first asks how much price room may exist if the structure develops as expected; entry and stop ask how much risk must be taken to test that hypothesis. For a long, potential reward can be calculated as the conservative target minus planned entry, less fees and slippage. Planned risk is the distance from entry to the predefined protective stop, plus fees and slippage. The protective stop should have a clear market basis but need not coincide with the ultimate invalidation of the larger structure. Reverse the direction for shorts. Align contract multipliers, quotation currencies, and exchange rates. The entire distance from target to stop is not potential profit.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
9 lessons · Chapter contents
01Point-and-Figure Charts Versus Time-Based Candlestick Charts↗02Box Size, Reversal Boxes, X Columns, and O Columns↗03Price Data and Construction Rules↗04Basic Differences Between One-Box and Multi-Box Reversals↗05Wyckoff Horizontal Counts: Count Line and Counting Range↗06Segmented Counts and Their Difference from Phases A–E↗07From Count Results to Target Estimates↗08Parameter Changes, Recounting, and Hindsight Selection of Boundaries↗09Connecting Target Estimates with Actual Trading Risk↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
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