Tim remembered that it was in the year 2000 when one of his good friend had decided to enter a short entry into the S&P 500. He saw a long tailed bar in an up-trending chart followed by a long red bar. After he has entered the short entry, the market went against his position by 100 S&P points.
Tim thought it is absolutely crazy to have such a position in an uptrending chart. His friend told him that it is a ratio play. He is willing to risk 100 points to potentially make 400 points.
Tim is a fast learner and he understands the numbers well.
He also understands the risk-reward ratio and implements it in 2007.
Watch out for the next article on how Tim implemented it.
SmartPassiveCashFlow wishes All A Wealthy 2014.
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