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Assume your entry price for both long and short positions is $50 and you would like to set the reward-risk ratio (RRR) at 1.2. Calculate the profit and loss exit points for both long and short positions.

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Answer:

Long Position

Profit exit point: sell limit= 8.33

Loss exit point= 41.66

Short Position

Lost exit point: buy stop= 58

Profit exit point:buy limit=40

Explanation:

Calculation to determine the profit and loss exit points for both long and short positions.

LONG POSITION profit and loss exit points

First step is to calculate the Profit exit point: sell limit

Profit exit point: sell limit=( 50x10% )/1.2

Profit exit point: sell limit=$10/1.2

Profit exit point: sell limit= 8.33

Now let calculate the Loss exit point

Loss exit point=50-8.33

Loss exit point= 41.66

SHORT POSITION profit and loss exit points

Lost exit point: buy stop=20%/x=1.2

Lost exit point: buy stop=20%/2

Lost exit point: buy stop=1.6

Lost exit point: buy stop= 50+(50x1.6)

Lost exit point: buy stop= 58

Now let calculate the Profit exit point:buy limit:

Profit exit point:buy limit=50-(50*.20)

Profit exit point:buy limit=40

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