risk reward is very important but there isnt a magic number where u can say if i have 2:1 i will be successful. Randomly buying with a 20 tick target and 10 tick stop doesnt lead to a great methodology (although may actually make money in the long run, just with horrible drawdowns). It depends on your win rate, ive seen people that risk 2 ticks to make 1 and are very successful, but they have 90% winners. Likewise some people only win 20% of the time but they risk 10 ticks to make 100. Its all about expectancy
Hoggums
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Isn't 2:1 risk/reward - meaning you are risk 2x as much as you stand to gain?
If that's the case then I think there are plenty of newbies you employ this strategy!
If you could guarantee a success rate of > 67% then this would be a successful strategy. But realistically - how many people could get that many of their trades correct?
If that's the case then I think there are plenty of newbies you employ this strategy!
If you could guarantee a success rate of > 67% then this would be a successful strategy. But realistically - how many people could get that many of their trades correct?
hendrix
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Hi!
It's quite possible. I'm doing it for the past three months now. I also did it today. 20 pips isn't so hard to grab, if you stick to high probability entries - I always follow the H1 trend, I buy/short near TL's and S&R's and more or less, that's it. My February success rate is 94% (16 trades and 15 winners). I also use Trailing Stop Losses, which means, that my "real" Risk/Reward ends up smaller than 2:1. It is very rare that I take a full 40 pip loss.
Still, I haven't seen many people doing it, that is why I was wondering if anyone else is trading like this. Never in my life had I such success, as I have now.
Rossini
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My success rate is around 90% I have a few BE's obviously on these just aim to cover the commission cost + spread. If you included these then it would be 75% or there abouts.
hendrix
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67% is the theoretical BE point, but it also helps if one of the low spread crosses is traded. EUR/USD for example has many times a <1 spread (if you trade with an ECN type of broker).
And this is how my volatility adjustments will look like:
Daily ATR (set @ 21, because there are 21 trading days/month) : 5 = Default TSL : 2 = Default PT.
EUR/USD is currently ~ 200 pips/day, so my TLS is 40 pips and my PT is 20 pips. When it falls below 150 pips/day for a couple of days, then I will adjust my TSL to 30 pips and my PT to 15 pips... And so on.
This seems to do the trick so I won't have to change my beloved EUR/USD for something else, when the volatility drops.
