Post
Topic
Board Trading Discussion
Re: Risk/reward ratio problems - Risk management
by
reactorjuno
on 01/09/2018, 01:59:08 UTC
No doubt that risk management is very important in a trading and that you can not success without in a trading. But, regarding the R:R ive got some questions.

Let's say your R:R is 1:3, and you start trading, and what if trade doesn't go in your favor? You cannot close it 3 times bigger than your loss, for example; its impossible for it to go more than 1.5% up for your profit. Then all of the 1:3 R:R theory falls into the water? Or what? Can someone explain it better?
Your post is not very clear:

Quote
You cannot close it 3 times bigger than your loss
... but in that case you lose 1 and move on to the next trade. With a 1:3 goal, you will be good with a 40% success rate.

But I'd rather go for something like:
Stop loss= -1
Profit= +2

This way you'll earn money even with a 50% success rate in your chosen trades. But of course the 50% success is the hardest part, but never underestimate how tough it is (for many reasons) to stick to your RR discipline.