Besides the math on risk to reward, it's a non issue because you have no control over how much you win. The only thing we have any control over is our risk. And that's the whole point of Mike's discussion here: risk management, not profit management.... Love it.
I'm an automated backtesting freak, and I've come to the same conclusion about R:R. Define your most important metrics (net profit/profit factor/max drawdown/percent profitable) and optimize your strategy for your preferred metrics. There are always compromises in performance among the various metrics.
YES! Finally, someone who has done the ACTUAL math, and knows that R:R and winrate are inversely correlated. It's the biggest load of bs that most traders believe. 1:1, 2:1, 1:2, 10:1... They all break even.
I cant agree more that in Risk Management - expecting too much profits in first few weeks is not right. Focusing on the basics of skills for a good trader is very crucial. I have been with a Broker Market101 and this has helped me a lot. Most of the brokers loose their way due to greed and not taking trading with professional background or proper studies.
Having a fair stop loss is good but I found sticking to a RR will make you miss out on too many setups and you must adjust to the price action sometimes its obvious your price target wont get hit and you should take profit.
That part about risk of ruin having the 'capital phases' - don't go digging into that second pile until you learn the lessons from the first one. That's real good.
Im using martingale since 2010. Biggest problem is risk reward my goal is to reach 1/2 im still doing it successfully whit 1/2 so far i only had to place the the 6 trade in the sequence. I truly believe they are all the same in terms of capital requirements altho whit martingale it really differential. (I know its dangerous And all that its my choice tho)
You know what, if you set SLTP in your trade, sure enough you're trading your Bank's account. Big guys love your SL and sweep it when they enter trade.😊
Some traders frequently eat like a bird and once in a while take a dump like an elephant. Other traders eat like an elephant once in a while and take a dump like a bird here and there.
The only numbers that are important are a consistent win rate and R-value. It’s so clear that on reality very few day traders can consistently deliver a 55% win rate over a 12 month period.
Can you give us some names of the prop firms you are referring to? Most, if not all of these online "prop" shops, topstep, apex and all the rest actually couldn't care less if you ever become a truly professional trader that trades with them. They never really give you any actual cash to trade, you are basically given a very small amount and you have to build your own account. Yes you can make some money and there are some benefits, but pretty much it's all a smoke n mirrors show. Their whole business model is designed to make money off of the fees.
With the election approaching, I’m reflecting on how possible policy changes could affect market growth. The outcome of the election can significantly impact industry performance, introduce market fluctuations, and require updates to your investment plan due to changes in legislation.
You kind of miss the point: let's say you would always take profit at 0.5 instead, and in that case that turns out to happen 70% of the time while only 20% of the times you reach at least 1:1, it would be better to just take the 0.5 each time. On top of that, often you can then re-enter at the exact same price or even a bit lower, to do the same thing 2-3 times in one session.
Great info. I agree on RR Tho i see it as a general guideline to see how my strategy is performing. I remember a trading educator so proud that he stuck to his plan and let a 6 RR trade go to breakeven because his RR target was like 7 or 8 RR.. and it didn't hit. Maybe it works for him but he shouldn't teach that. Another way to look at it. He had a 2:6 RR at some point.
Risk management is getting the winrate right depends on the risk reward you using for the trade you on. You can trade negative risk reward as well if your winrate is above the breakeven and covering the fees. It's a formula that you need to follow which you didn't even mention or learned. Also your risk percent is not fixed its all depends on your risk reward. You need a lot of learning sorry
