Risk vs Reward. Which of These Two Trades Would You Take? Experts We Need Your Help

first of all,

risk has a pretty vague definition.

depending on the setting.

in a daytrading setting, risk is basically the unforseeable event where it will rip your shirt.

in investment setting, risk really varies on your investment philosophy and the stocks you choose to invest.


for example,

when a stock goes down 25%, in a daytrading setting your most likely fucked.

when a stock goes down in a investment portfolio, probably a value investor, the deal is ever more sweet and you would soundly accumulate.

at least this is al ltheoretical but jsut to illustrate to you taht risk itself has a whole variety of meaning depending on setting. and no i dont bother checking grammar and spelling.
 
Quote from riskfreetrading:

Imagine that it is 4PM. The market just closed. You were busy, and did not watch the stock at all. Then you go to that House where you can play the game of the stock, with the outcome between you receive or lose the difference being the difference between Open price and Closing price.
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So, at 4pm, I can buy or sell the stock, and my fill price would be the 9:30am open for that same stock on the same day?
 
Quote from jjk2:

first of all,

risk has a pretty vague definition.

depending on the setting.

in a daytrading setting, risk is basically the unforseeable event where it will rip your shirt.

in investment setting, risk really varies on your investment philosophy and the stocks you choose to invest.


for example,

when a stock goes down 25%, in a daytrading setting your most likely fucked.

when a stock goes down in a investment portfolio, probably a value investor, the deal is ever more sweet and you would soundly accumulate.

at least this is al ltheoretical but just to illustrate to you taht risk itself has a whole variety of meaning depending on setting. and no i dont bother checking grammar and spelling.
More...

Point of perceived (vs. actual) gain and loss is a good point. That is why hindsight example helps reduce the difference between perceived vs. actual to better capture the insight.

Also people think that risk is actual because the put a stop, but actually it is just perceived as the stock can gap down.
 
Quote from riskfreetrading:

Yes. It is a game vs. the House.
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OK, now that we have it straightened out, I'll restate your original question for everyone's benefit:

On a given day, the stock traded as:
open: $10.90
high: $11
low: $10

And your question is, "was the close on the same day likely to be higher or lower than $10.90"? Correct?

The answer is, the close was more likely to be lower than the open. Is that all?
 
I am not asking to predict the close. What the questions are asking is that if you are given the high and the low, and the other information in the order it was given, to calculate risk vs. reward and decide on which side is better to take, and also which information to use / not use, etc.

But it you can predict the close, write about it. I did not have in mind to ask to predict the close. The close is random a priori, the house does not reveal it, and the player does not know it, but you have a prediction method in mind go ahead and write about it.

PS: If other questions follow and I do not answer them before few hours, it means I went to bed and not being rude.
 
I can calculate the probabilities, but what's the point of this exercise? In real trading, the high/low of the stock for the day is not known at 9:30. And when you do know the high/low, you can't buy or sell at the "open" price. So, what's the point?
 
Now everyone please remember that if you answer the question to RFT's satisfaction then you too can trade just like he does. You will be allowed to post your own fake trades with simulated profit. And let's not forget the millions of fans you will acquire, so by all means, answer these questions very carefully so you can also get permission to refer to yourself in the third person.

Ok, back on ignore for you.
 
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