thread: 1:1 Risk Reward Ratio - Why it just makes sense

Agree that because one trader can't get an indior or line research to function profitably for him, it does not mean that nobody can use it efficiently.

Agreed, I've always said that nearly each single system or egy has any degree of merit and potential, but we're not speaking about indiors or line studies.

MM is pure mathematics, and consequently applies to trading as it does to other games of luck. As the punter needs a gameplay-based border (like counting cards in Blackjack) to conquer the match, the trader needs a methodological edge (entrances and exits) to conquer the market.

I suppose it depends on if you view the market as an adversary or an outsider, a rival to conquer or a car that offers opportunities to make money.

Comparing trading to casino games is slightly illogical however, a commerce does not have the same limitations and offers the trader much more flexibility than casinos and casino games provide the gambler.

Martingale, hedging, scaling in/out, etc are MM variations that are, in themselves, impotent. People say that Martingale operates #8212; of course it does, because the in-built recovery process is intended to make certain that each and every pair of transactions finally returns to split even #8212; before the situation takes place when the position sizes escalate to the point that a margin call occurs. Some of the Martingales can deliver profit prior to the' death sequence' occurs, for several months, even years. Every functioning Martingale is merely one that has not...

Someone may use your same indior and line research argument from you here....

Simply because one trader can't get an indior or line study to function profitably for him, it does not mean that nobody can use it successfully.

My point being that, as you have pointed out, a few things are so obviously not optimal for trading.

That would mean you'd have no advantage in receiving the direction correct, in which case you shouldn't be trading yet whatsoever.

So at a market which can be volatile and unpredictable one approach maximises profit once it gets direction directly and the other relies on getting it right more often than wrong. I suppose the question then is are we predominantly from the trading enterprise or the calling business?

Or are you really saying trading and calling are one and the same?

Even though he deals a different game you may want to take into account the wisdom in Soros's quote in my sig, it's equally applicable....

#8595;

[quote=Roofx;5760215]would not have any advantage in receiving the direction right, in which case you shouldn't be trading yet at all. As many here seem to be dismissing (or simply missing), you have to get an edge before you even consider any kind of RR ratio. I think a few in this thread are forgetting that. However, I agree with some of your points that are other .

This really is the issue with forum debate,I have attempted to look at this subject from both sides and can see merit or requirment for 1;1 ratio trading s,although I stated I wouldn't earn money employing 1;1 ). I commerce price and price dictates at any given moment what choice I should make.ther lies my advantage,I see price and choose what price offers me.if I had fixed rr,I would never obtain the average of the favorable.

Your asking those to except your R/R and maths and your also being very opinionated.

I commerce price and price dictates at any given moment what choice I must make.ther lies my advantage,I read price and choose what price offers me.

And that's trading. We can not control the market, the only thing we can do and be completely in control of is reacting to what the market does, irrespective of whether we're right or wrong about where we presumed price would proceed. Predicting puts way too much dependence on the market agreeing reacting puts the ball squarely in our court and completely within our control.

And that is trading. We can not control the market, the only thing we can do and be totally in control of is reacting to what the market does, regardless of whether we are wrong or right about where we presumed price would proceed. Predicting puts way too much reliance on the market agreeing reacting puts the ball in our court.

Is there an example of a transaction you could give us Pipmutt, such as only describe a scenario on how you would handle your trade?

My dilemma is I will pick very frequently the market will go from A to B if X happens. My 1:1 theory was that if I add a few times I will not need to wait all of the way I will tailor the trade to create the identical profit but until the market hits B if you know what I mean.

But as I'm finding especially in such whipsawing markets is that as soon as I typical in it leaves me open to shake outs. Additionally (a plogical impact ) As soon as I increase my risk I'm inclined to widen my stop which has all sorts of absurd affects in my entire shiz.

Previously I would trade in a manner that intends to split B and reap the big R:R.

There is so many ways to skin the. It does my head in.

But all this said I think what I'll do is just trade to B as a stationary goal. Not increase risk and just add with a tighter SL. It's all I got right now. Whatever profit I make I create.

I think my problem is as far as I hate to admit it.

My 2c, FWIW:

Agree that just because one trader can not get an indior or line study to work profitably for him personally, it doesn't imply that nobody else can use it successfully. Unless one has knowledge, it is impossible to say egorically that a particular tool can not possibly work.

Ultimately it is how one uses the available resources, interprets the market, and sets all the pieces of the methodology together. There are lots of streets that can potentially lead to Rome (and even more that don't). Additionally, after a trader finds a methodology which...

NP

What is better: A 1:2 Risk Reward Ratio applied to a system which has a 35% hit rate or a 1:1 Risk Reward Ratio applied to a system which has a 70% success rate? The answer is neither. They yield the exact same profit.

Should you monte carlo simulations on these systems you will observe that one is superior to another. 1 sistem has much less enormous drawdowns in 100 transactions and can be employed with a greater amount of risk/trade.

The most common belief among forum Traders is a 1:2 or higher RR is necessary for profitable trading. Individuals who say this frequently are under the misconception that there is a 50% likelihood of the market hitting their SL plus a 50% chance of it hitting their target. Well a simple understanding of trading and easy mathematics would show there is a chance of price hitting 20 pips compared to hitting -10. Many traders think if they can think of a sytem which has a very slight edge then that 1:2 or higher RR will be what makes them...

Hi

While I agree with your math. You have to consider expectancy ratio.

I haven't read the thread, simply responding to opening article.

I am not going to do the math . Simply giving you an illustration:

If in 1:1 system, the amount of successive loosing places is 3-4, then the capital left to exchange, will be a lot reduced, so today even if you should get 3-4 winning trades that the percent won't receive one to starting capital.

Again I don't have any idea about starting capital here or the kind of risk-management/money management which will be run on the account.

Same situation: 3-4 loosing trades with a 1:2(I take higher RR entries, just supposing what you have posted) risk benefit, after which 3-4 profitable trades with 1:2 ratio. It will not simply take me.

I assure you that the no. Of entries every week which you can find with ratio greater than 1:2 is enormous. Not all need to be winners but it's very hard to be profitable over the long-run.

Consider this, if you may have a 60 percent profitable trades ratio you are one of the elite traders. Many traders have a lesser profitable transactions average but profit from profitable transactions covers the looses and leaves profit on original/compounded capital.

Hello

While I agree with your math. Expectancy ratio must be considered by you.

I have not read the thread, just responding to opening article.

I am not likely to do the math here. Simply giving you an example:

If in 1:1 system, the amount of consecutive loosing positions is 3-4, then the capital left to trade, will be much lower, so now even if you were to get 3-4 winning trades that the percentage won't receive you to starting capital.

Again I don't have any idea about starting capital here or the kind of risk-management/money management that will be conducted on the account.

Same...

very very bad mathematics. Are you some sort of a beginner?

very very bad math. Are you some kind of a beginner?

Which part do not you agree with?

As for math, I didn't do any math in the article.

I still consider myself a beginner, only been trading almost ten decades. Profitably for the few that are past.