Bullish or bearish you need to get risk/reward right

Bearish Setup: Trade: Buy the GC Apr 1210-1200 Put Spread for $2.20 Risk: $220 per one-lot Reward: $780 per one-lot Breakeven: $1207.80

This trade also sets up for a great reward to risk ratio and allows a trader to be short without a stop. This trade also has a very well defined downside.  

Whether bullish or bearish the potential for higher volatility can make every trade a loser regardless of whether you are eventually proven right. That is why having defined risk parameters that without costly stop slippage is necessary to manage volatility.  

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About the Author
James Ramelli

James Ramelli is the Moderator of the Live Futures Options Trading Room at KeeneOnTheMarket.com where he actively trades futures and options on futures while educating members on strategies, setups and risk management. He has a degree in Finance with a focus in Derivatives Trading and Financial Engineering from The University of Illinois and has been trading for five years. James appears regularly on Bloomberg T.V. and BNN and writes a weekly column for Futures Magazine.

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