Post by
Schwag on Nov 07, 2020 11:27am
Risk to reward ratio
One thing I always keep in mind with DN is the risk to reward ratio. Personally I'm only interested in investments that can at least double my money. I feel like there is very little downside risk here but multi bagger upside. We are sitting on a consolidation base with improving fundamentals and possible market tailwinds. This risk scenario is very different from Aurora for example where the SP can certainly go lower based on fundamentals but every once in a while the SP just skyrockets based on what??? No true substance behind it. Does a $10 SP represent a favorable risk to reward ratio? I don't believe so. The risk to reward ratio is equal in both directions. What about putting money into Tesla right now? We have a stock that's already parabolic with a PE ratio of over 1000. The downside risk far outweighs to upside to an extraordinary degree. There might not be any upside only downside in the case of TSLA. I understand it's annoying to watch other stocks go through the roof while we sit here waiting but our time will come.
Comment by
StuffMonger on Nov 07, 2020 11:49am
Trading anything that isn't listed on American exchanges is risky because there is very low liquidity and are generally more exposed to negative overall market conditions than positive ones