Risk Reward Myth

Jason101

Experienced member
1,366 214
Scaling in or scaling out, or both? Personally I don't like either, but I'm aware many people do. Scaling out seems to be the more popular.
I can not relax until I have some profit secured.

Once I have started to scale out I have a warm comfortable feeling inside.:eek:
 

Harry Sanborne

Newbie
7 0
Who has the BEST chance of success A or B or C or D? All players have £1,000/ $1,000 in account.

A. Short on DOW with Stop Loss at 25% account risk.

B. Short on FOREX with stop Loss at 25% account risk .

C. Short on GOLD with Stop Loss at 25% account risk.

D. Short PUT/CALL DOTM on OIL with Stop Loss at 25% account risk.

Please place in order of choice on all 4. [ Leave out "D" if you are not sure on options.
========================================


Who is more likely to go bust FIRST if they continue the strategy with same % on stop loss A, B or C or D?

Please place in order of choice on all 4 or on 3
 

Atilla

Legendary member
18,923 2,646
My concern with scaling out is you are basically cutting some some of your profits short.
Can it not also be considered managing the trade - as I like to think of it. Also - trailing SL I think of as trade management etc...

I have struggled with it must confess - but on this demo have left it out. All trades are limit orders. There were quite a few that were in profit and subsequently that got stopped out.


I will have some time in my hands hopefully in the next two weeks and plan to open three demo accounts. (Will leave existing Risk1-Reward2 account as is Currently 1.3K in profit after 7 weeks - 2.6% return).


R1/R1
R1/R2
R1/R3

Will place identical trades on Sunday evening for all 6 pairs of currencies and see how they perform.

Using same BB breakout placing two pairs of trades with identical SL & Limits based on BBs.

Hope to put it on Excel and evaluate stats.

Will be looking at performance in the three demo accounts with respect to;

1. TimeFrame
2. % BB as oppposed to previous range ie 5,8,13 periods (No idea re: what to pick so Fib numbers seem a good starting point). May put 10 in there too as it seems to be significant with candlesticks as a turning point.
3. % breakout based on BB range.
 

Jason101

Experienced member
1,366 214
My concern with scaling out is you are basically cutting some some of your profits short.
This is the so the opposite for me, scaling out stops me from cutting profits short. If I am all out at once I feel fear on a miner retracement and exit to early!

Or I get greedy and say to myself, it’s only a minor retracement and hold it back down to break even!!
 

Jason101

Experienced member
1,366 214
Can it not also be considered managing the trade - as I like to think of it. Also - trailing SL I think of as trade management etc...
Ahh, when I scale out I am physically tightening up my stop to a within a whisker.

So if my trade management is on say a 4h t/f my scaling out will consist of a percentage of the trade having its stop moved to a 15m t/f stop.
 

jolynnforex

Newbie
5 0
No matter what risk/reward ratio you have. For me it is always important to develop a winning system with at least 60% winning rates. Otherwise you will get frustrated.
 

HowardCohodas

Experienced member
1,868 97
No matter what risk/reward ratio you have. For me it is always important to develop a winning system with at least 60% winning rates. Otherwise you will get frustrated.
There are many trading personalities. Some can tolerate a low-win rate high-return strategy, some cannot. As long as there is a positive expectation, there are many that will accept all combinations of win rate and win size.
 

Atilla

Legendary member
18,923 2,646
Placed following 6 demo trades as below - based on 1hr charts.

Risk 1 Pair Direction Limit Order Stop Target
Reward GBPUSD Long 1.63300 1.62600 1.64000
1 GBPUSD Short 1.62600 1.63300 1.61900

Reward GBPUSD Long 1.63300 1.62600 1.64700
2 GBPUSD Short 1.62600 1.63300 1.61200

Reward GBPUSD Long 1.63300 1.62600 1.65400
3 GBPUSD Short 1.62600 1.63300 1.60500


We'll see how the trades pan out...

The XLS cut and paste loses tabulation - sorry about presentation...
 

ronblack

Active member
177 12
There are many trading personalities. Some can tolerate a low-win rate high-return strategy, some cannot. As long as there is a positive expectation, there are many that will accept all combinations of win rate and win size.
True but positive expectation is far from enough to make you profitable. I have met many traders with positive expectation that got ruined eventually.

I would like that you think about situations when there is positive expectation, yet the trader is ruined. Can you think of an example?
 

JohnnyForex

Member
50 1
You may want to augment your provenance with this site by mentioning the nature of Fudgestain’s off-site activities and why when Mr. Marcus blew the whistle on him he disappeared forever.
Bumping an old thread as I was reading older posts.

It looks like TheBramble is no longer active, but I was wondering if anyone had any more information on Fudgestain or Hoodoo Man (Blotto on ET?)?

The reason I'm asking is that I'm a big fan of the posts by Cheese on ET, which I understand is Fudgestain (have not yet read his posts here) on this site, but I've always had the feeling that what he wrote were too good to be true.

So, I'm wondering if anyone know what this was all about and what Fudgestain's off-site activities were.

Thanks in advance.
 

numbertea

Well-known member
257 9
Biggest risk/reward blunder I ever made was not factoring in a finger fumble on the keyboard. Truth is that you can estimate your risk/reward ratio but you can never fully account for the risk. This may sound useless but I would say that common sense and a trading plan that increases your account is more important than calculating risk/reward ratios. IMHO. If I felt I had to super tightly determine this ratio I would rethink my trading plan first.

Cheers
 

JohnnyForex

Member
50 1
Bumping an old thread as I was reading older posts.

It looks like TheBramble is no longer active, but I was wondering if anyone had any more information on Fudgestain or Hoodoo Man (Blotto on ET?)?

The reason I'm asking is that I'm a big fan of the posts by Cheese on ET, which I understand is Fudgestain (have not yet read his posts here) on this site, but I've always had the feeling that what he wrote were too good to be true.

So, I'm wondering if anyone know what this was all about and what Fudgestain's off-site activities were.

Thanks in advance.
Bumping this again.

I have to say I found his posts interesting and thought provoking.
 

JohnnyForex

Member
50 1
Bumping this again.

I have to say I found his posts interesting and thought provoking.
Final bump!

A big fan of Cheese and Fudgestain. No knowledge of Blotto/Hoodoo Man.

Could anyone enlighten me as to what Fudgestains off-site activities were? Same with Hoodo, really.

PM if better.

Thanks in advance.
 

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