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Scanning for Reward over Risk Ratio
Many technical analysts have strongly recommended to only buy stocks which have a potential Reward/Risk of more than 3. Looking back over 3 or more runs to determine the average gain (reward) and the size of the stop that would have been required to get into the position at the bottom (risk) takes a fair amount of time if you are doing it on a lot of potential stocks you are considering. So, I have some questions.
1. Is there a way to scan for this?
2. Is there a way to scan for a surrogate of this?
3. If there is no way to scan for either, is it legitimate to do this for say 100 stocks you would consider (scattered over the various sectors you would like to buy) and expect that if a stock had a Reward/Risk of 4.5 - 6 in a previous rally (say 3 years ago) that it will likely have a Reward/Risk of over 3 in the rally that is starting?
Thanks for the help.