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

But'reacting' is actually just looking into the past to try to guage what the future might hold. When you'respond' to the market you're reacting to try to predict future data. Price action relies on looking at something that's old news.

When someone throws a ball towards us, we react to what's occurring, but really what we're doing is studying obsolete info, ie. What the chunk has done just fractions of seconds past, to predict what's about to occur, ie. What the chunk has a higher likelihood of doing a few fractions of seconds...

THis is a great place....100% place on....and anybody who tries to tell you trading has nothing to do with forecast is talking crap. IT's using info to Try to predict an outcome

The problem with this thread is that everybody is stating something similar to it is known. Everybody that deals for living understands this (everything mentioned in this thread) and it's composed in nearly 60% trading publications.

26 pages of what's this thread about?

I concur with you there's a relation between RRR and Hit Ratio. I dont think anybody will disagree about this with you.

When I feel a 1:1 system works or not. According to my trading may work together with your trading style/system.

Have a good one.

Thank you Neo. The trading fashion is an integral factor. I'm specifically using this RR with a term scalping technique.

Trading successfully is trying to forecast future events.

Of course originally one needs to get a directional bias, and resources to help form that bias which are normally based on previous data, but finally it's the market which decides direction, once we are in a commerce all we can do is react.

Using your ball illustration. Say the ball traveled faster than you expected by standing still and it wasn't ched by you, your response is to run after it. Or if traveled slower you could run towards it. You are reacting to what happened rather than creating a predetermined decision of standing in a specific place in advance based on your expectation of what could happen. Keeping your options open enables more flexibility in the time and more likelihood of ching the ball if it doesn't do exactly as you expected.

This is an excellent point and it's true if a person always trades a percentage of the current account balance for every transaction. I use a fixed lot size for each trade and since the account grows, the risk percentage shrinks, before the start of the month when I move it back up into the starting risk percentage. This allows for the prospect of a series of successive losses at the start of a month that is certain and being able to generate every penny back after the same number of wins are acheved. However, your point is very good and...

No problem.

Contemplate this:

Your system hits a no. 1 or of consecutive loosing trade at the month's start.

You're still trading a fixed lot size, with a lower funding, so now in the event that you have a loss again you'll have a drawdown that's in proportion to the starting capital rather than the capital left after 1st loosing trade. Higher percentage. Duplicate the pattern over 3-4 trades and well you understand.

Only decreasing the risk if account funding raises leaves you open to the other side. Decreasing lot size is essential to steer clear of major drawdowns.

Have to go now. You know.

Best of luck.

Of course originally one needs to have a directional bias, and resources to assist form that prejudice which are normally based on previous data, but ultimately it is the market which determines leadership, once we're in a transaction all we can do is respond.

Using your ball example. Say that the ball traveled faster than you expected by standing still and you did not ch it, your reaction will be to operate after it. Or if traveled slower you could run towards it. You're reacting to what actually occurred rather than creating a fixed decision beforehand according to...

To conduct after the ball will mean to use past data to predict where the ball will land. And that is about as far as the analogy can go because the ball lands it cannot be compared to trading. The market never lands wheras a ball does and so you can go and pick it up with 100% certainty.

Trading is currently predicting. All this talk of reacting rather than predicting is widely misunderstood and thrown around. It is just predicting on shorter scale. Once in a transaction you make decisions of what to do next, to stay in, to move your stop, to exit etc. by analysing past data to try to predict future data.

The problem with this thread is that everyone is stating something like it is not already known. Everybody that deals for living knows this (everything stated in this thread) and it's written in almost 60% trading books.

26 pages of what's this thread about?

Just shooting the sh•t.. . Deciding on some brains, I really don't know why I'm here, whatever's.

Only shooting the sh•t.. . Picking on a few brains, I don't understand why I'm here, anything that's.

Haha nice one

any predictions about the trading arena...I've heard from many traders that neural nets is a bust - over-optimization is killing them

once the ball lands it can't be compared to trading.

I was just using your analogy.

Should you stick with your initial decision and do not transfer you won't ch it. If you proceed then and respond to what the ball is performing there's more likelihood of ching it.

once a trade you make decisions of what to do next, to remain in, to move your stop, to exit etc. by analysing past data to attempt to predict future data.

My point exactly! Whereas what you say you're performing is a fixed 1:1 beforehand whatever the market is performing, telling you, or offering you.

forecasting on shorter scale

I think you're splitting hairs regarding predicting and reacting, one is generally considered calling the future, another as reaction to current circumstances. Semantics.

Composed:

I was just using your own analogy.

If you stick to your first decision and do not transfer you won't ch it. If you proceed then and react to what the chunk is doing there is more probability of ching it.

I disagree. You are analyzing the ball has performed and using that past data on a very small timeframe to forecast what the ball is very likely to do in order to have a higher prospect of ching it. If time froze during the ball's motion and then you showed up on the scene, then you wouldn't have the ability to assess which direction the ball was travelling or quickly, in order to have a good prospect of ching it. You would have to see past data to have a higher probability of calling what it is going to do.




My point precisely! Whereas what you say you are doing is a beforehand whatever the market telling you is doing, or offering you.

Yes. Due to my edge and with a 1:1, the market strikes my goal more often than it strikes my stop. It provides me 10 pips many times per day and therefore I take them. It does not offer so I do not trade that manner and me 1:2, 1:6 or 1:3 opportunities nearly as often. I love to get busy and concentrated while I trade and then finsih for daily and get on with other aspects of my own life. High success rate 1:1 RR is what works for me.



I think you are splitting hairs seeing calling and reacting, one is generally considered calling the future, another as response to current conditions. Semantics.

No. I too am reacting, not calling When people take your definitions. I take transactions that are more inclined than to lose, to work out and react to what's occurred on a time period. When profit gets to 10 I react by exiting the trade. Doing so is a part of the rationale y hit rate is large. Many times struck my stop or break point and it would return on me, When I let it run. Entry procedure and MY edge requires a 1:1 RR ratio.


It's predicting. It's reacting. It's trading.