Spilling the Beans on Luckin Coffee Risk/Reward RatioLK Is currently sitting very near its lifetime uptrend support trend line, which means it's finally in range for a proper Risk/Reward Ratio for me to trade. This is my trading style, find stocks near support or resistance lines and making bets on the reversal. This method allows me to place very tight stop losses just outside of the patterns, so if it breaks outside the trend I can get out with only a minimal loss. On the other hand, if the reversal does occur, I get the entire move and don't have to be the guy chasing something down and inevitably holding everyone else's bags. So...LK entry at closing price of 19.56, with stop loss just below trend line, so 19.25. Target price for long is around the bottom of earnings gap and former support trend line area, so 22.20ish. This affords me a RRR of about 8.5:1 in favor of reward. Worst case scenario and it starts dumping below support line, I'm out with capital left over to go elsewhere and get it back. Happy hunting and GLTA!!
