Screenshot is below.

I just downloaded the app and noticed that “cost of trade” ( assume to
be commission expence) works correctly for loss on sales where stock
price goes down, however it appears to be additive on gains (profit)
when stock price goes up. I would have expected the cost of trade to
always reduce the return; increase losses and reduce gains. Will this
calculation be revised in future app release?

So, let’s take a look at what a calculation looks like. With an upcoming version of Risk/Reward you will be able to email yourself the results, so let’s use that feature for this. We’ll take a simple position so that the math is easy to see:


Risk/Reward Results (2009-9-27 10:44 AM)

Reward (nR)
R Sell Price Profit
1R 11.10 110.00
2R 12.20 220.00
3R 13.30 330.00
4R 14.40 440.00
5R 15.50 550.00
6R 16.60 660.00
7R 17.70 770.00
8R 18.80 880.00
9R 19.90 990.00
10R 21.00 1100.00


In the trade above, the cost of the trade was $110.00, so this is the 1R. Cost of trade, or, as Van K. Tharp calls “The cost-of-trading opportunity”, includes commissions (to buy and sell), execution costs (slippage, i.e., you never get the exact price you want), taxes, and psychological costs. So, altogether, for this trade, you are risking $110.00 (1R). In order to realize a profit of 1R (again, $110.00), you would have to exit at $11.10. To gain 2R, or $220.00, you would have to exit at $12.20, and so on. The R-value is a multiple (i.e., straight multiplication) of the risk.

If this calculation does not match up with your take on the R-multiple risk for a trade, please let me know, either by commenting below, or sending me an email: lucasrockwell at lucasrockwell.com.

I am working on a new update to Risk/Reward — the ability to save your calculations. This update should be out around mid to late June.

Thanks to everyone who has purchased Risk/Reward!

With version 1.2, Buy Price has been changed to Share Price, as share price is more accurate, especially when short selling. Thank you to a very loyal Risk/Reward user for suggesting this change!

Also new in 1.2, the app now remembers the last value for Cost To Trade, as this cost is most likely to stay the same from trade to trade. This way you do not have to enter this value each time you use the application. Once you enter a value in Cost To Trade, it stays at that value until it is changed.

Version 1.3 will be out in the next few weeks, and this version will allow you to shake the phone (if you have an iPhone) to clear the input screen.

Second, if you would put a comment on the App Store that would be great. Of course, positive comments are most appreciated :-), but any feedback would be welcome. I think if more people comment, the more newcomers would see that the app is actually used by other people, which would be a huge benefit to the app’s exposure.

Again, thanks!

This version allows you to do the calculation for a long or short purchase. The interface has been updated with two new buttons — “Calc: Short” and “Calc: Long” — which replace the one “Calculate” button. See the screenshot for the example.

You can do one calculation, then go back and do the other if you want. I debated putting the results for both on the results page, but thought it would be too cluttered, so I opted for the two button option.

The next version (1.2), which will be out in another few weeks, will have a preferences section where you can save default values for any of the fields.

iphone-support@lucasrockwell.com

You can also send general comments/suggestions/praise/etc., to that address as well. And again, thanks for purchasing Risk/Reward!

Even though the current market is going “sideways”, there is still a lot of money to be made in the stock market. However, you have to be smart about your stock picks, and using a trailing stop and knowing the risk and potential reward of each trade is essential if you are going to be successful.

This app was inspired by Van K. Tharp’s Book, Trade Your Way to Financial Freedom, which I highly recommend.