How the grade works
The grade is out of 100 points and looks only at the plan, not at whether the trade will work. Nobody can grade that in advance.
Reward : risk compares your profit with what you would lose if your stop is hit, not with the money you put in. Put $10,000 into a trade with a $1,000 max loss, make 30% ($3,000), and that is 3 : 1, a strong trade. Set your stop the way you really manage the trade: as a contract price, a % drop, or the max dollars you will lose on the whole position.
| What we check | Full marks when | Points |
|---|
| Risk on the trade | If your stop is hit you lose 20% or less of the money in the trade | 35 |
| Reward : risk | If every target hits, your total profit is at least 3 times the money at risk | 50 |
| Exit plan | Every contract has an exit (10). Scaling out early is fine | 10 |
| Break-even stop | You'll move your stop to break-even at a % gain below your last target | 5 |
A+ is 95 or more, A is 88, B is 78, C is 66, D is 52, and anything lower is F. Some mistakes cap the grade however good the rest is. A stop on the wrong side of your entry is an F. A stop that risks more than 75% of the trade, or exits averaging under 1 : 1, are a C at best. Exits that don't cover exactly the contracts you buy are a B at best. The stock's levels are shown for planning but don't change the grade.
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Results like those described are exceptional and not typical. Individual results vary.
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