| NOV 1986
Assessing risk on Wall Street part 2: Applying the Random Walk by Thomas A. Rorro
Assessing risk on Wall Street part 2: Applying the Random Walk by Thomas A. Rorro The Random Walk theory lets the investor evaluate the risk of an investment before the investment is made. In the first article in this three-part series, the potential profitability of this approach was demonstrated. Investments were reduced to a graphic representation of profit vs. the underlying common stock price. In this article, we will examine a technical analysis approach to the Random Walk. Profit characteristics of basic investments The profit characteristics of market instruments are determined by their nature. Investors avoid many of them because of lack of understanding or an inherent fear of the risk involved. In fact, all market instruments should be viewed as tools for building profit and controlling risk. Figure 1 displays the profit characteristics of simple market instruments, showing both long and short positions. In these representations, market instruments are described as a function of annualized percent profit and the underlying common stock price.
by Thomas A. Rorro
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.