Lesson / WY-06-29
R₀ is the initial planned risk amount fixed when the trade is established, including planned-entry-to-initial-protective-exit price loss, expected round-trip costs, and reasonable slippage, converted to a common account currency. R₀ must be positive. If zero, negative, or missing, do not calculate R; check prices, quantity, multiplier, costs, and conversion. If staging is part of the original plan, define R₀ as its maximum permitted initial-plan loss. If independent risk is added later, retain both original R₀ and incremental risk of the addition rather than revise the benchmark afterward to improve performance.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
13 lessons · Chapter contents
01Price and Time Expectations After Entry↗02Meeting Expectations, Underperforming, and Contrary Evidence↗03Changes in Holdings, Cost, and Risk After Scaling In or Out↗04Structural Exits, Time Exits, and Moving Stops↗05Improvised Plan Changes Versus Evidence-Based Rule Revisions↗06Execution Deviations and Their Technical Consequences↗07Four-Layer Review: Observation, Interpretation, Decision, and Execution↗08Initial Risk Amount R₀ and After-Cost R↗09MAE, MFE, and the Entire Trade's Continuous Net PnL Curve↗10Operational Definitions of Trading Rules↗11Samples, Future Information, Out-of-Sample Testing, and Costs↗12Win Rate, Profit/Loss Distribution, Expectancy, and Drawdown↗13Rule Changes and Version Control↗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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Relative Strength and Opportunity Screening
Point-and-Figure Charts and Price Target Estimation
