I think Salesforce.com is a great stock to trade for a number of reasons, and one of my favorites is the spread between its $35.19 average winning trade and its -$1.94 average losing trade. That's a difference of 18.17. By itself that number doesn't mean a lot. You still need the probability of a winning trade (57.1%) vs. the chances of a losing trade (42.9%) to get a more complete picture of the total risk, but with such a wide margin you almost don't need those numbers. Only CF Industries (31.75) and Shutterfly (20.04) are better.
1. LONG the week of 9.13.04 at $15.67. Using $9.27 for a stop, the initial risk (R) on the trade was $6.40. Stopped out and reversed to short at $15.00 the week of 1.10.05. The percentage loss on the trade was -4.3%, and the reward-to-risk ratio was -$0.67/$6.40 = -0.10.
2. SHORT the week of 1.10.05 at $15.00. With the stop set at $20.85 the R was $5.85. Stopped out and reversed to long at $18.49 the week of 5.16.05. The percentage loss on the trade was -23.3%, and the reward-to-risk ratio was -$3.49/$5.85 = -0.60.
3. LONG the week of 5.16.05 at $18.49. The stop was $13.24, so R = $5.25. Stopped out and reversed to short at $31.20 the week of 5.8.06. The percentage gain on the trade was 68.7%, and the reward-to-risk ratio was $12.71/$5.25 = 2.42.
4. SHORT the week of 5.8.06 at $31.20. With $40.12 for a stop the R on the trade was $8.92. Stopped out and reversed to long at $32.85 the week of 8.14.06. The percentage loss on the trade was -5.3%, and the reward-to-risk ratio was -$1.65/$8.92 = -0.18.
1. LONG the week of 9.13.04 at $15.67. Using $9.27 for a stop, the initial risk (R) on the trade was $6.40. Stopped out and reversed to short at $15.00 the week of 1.10.05. The percentage loss on the trade was -4.3%, and the reward-to-risk ratio was -$0.67/$6.40 = -0.10.
2. SHORT the week of 1.10.05 at $15.00. With the stop set at $20.85 the R was $5.85. Stopped out and reversed to long at $18.49 the week of 5.16.05. The percentage loss on the trade was -23.3%, and the reward-to-risk ratio was -$3.49/$5.85 = -0.60.
3. LONG the week of 5.16.05 at $18.49. The stop was $13.24, so R = $5.25. Stopped out and reversed to short at $31.20 the week of 5.8.06. The percentage gain on the trade was 68.7%, and the reward-to-risk ratio was $12.71/$5.25 = 2.42.
4. SHORT the week of 5.8.06 at $31.20. With $40.12 for a stop the R on the trade was $8.92. Stopped out and reversed to long at $32.85 the week of 8.14.06. The percentage loss on the trade was -5.3%, and the reward-to-risk ratio was -$1.65/$8.92 = -0.18.
5. LONG the week of 8.14.06 at $32.85. My stop was set at $21.67, so R = $11.18. Stopped out and reversed to short the week of 9.22.08 at $50.65. The percentage gain on the trade was 54.2%, and the reward-to-risk ratio was $17.80/$11.18 = 1.59.
6. SHORT the week of 9.22.08 at $50.65. The stop was $71.15, so that means R was $20.50. Stopped out and reversed to long at $37.27 the week of 3.30.09. The percentage gain on the trade was 26.4%, and the reward-to-risk ratio was $13.38/$20.50 = 0.65.
7. LONG the week of 3.30.09 at $37.27. The stop was $23.04, so R = $14.23. Closed last week at $134.12 with a stop at $116.07. The percentage gain on this trade is 259.9%, and the reward-to-risk ratio is $96.85/$14.23 = 6.81.
6. SHORT the week of 9.22.08 at $50.65. The stop was $71.15, so that means R was $20.50. Stopped out and reversed to long at $37.27 the week of 3.30.09. The percentage gain on the trade was 26.4%, and the reward-to-risk ratio was $13.38/$20.50 = 0.65.
7. LONG the week of 3.30.09 at $37.27. The stop was $23.04, so R = $14.23. Closed last week at $134.12 with a stop at $116.07. The percentage gain on this trade is 259.9%, and the reward-to-risk ratio is $96.85/$14.23 = 6.81.
Scorecard:
Winning Trades: 4 | 57.1% | $35.19/share avg.
Losing Trades: 3 | 42.9% | -$1.94/share avg.
Average Trade: Gain of 53.8% | $19.28/share | Reward-to-Risk Ratio (R): 1.51
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