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What's your TP? Fixed reward vs dynamic reward 5 replies

Rationale behind "Risk Per Trade" and "Risk/Reward Ratio"? 8 replies

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Risk Reward Ratio and Account Risk 30 replies

Attachments: 1:1 Risk/Reward Frowned Upon?
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1:1 Risk/Reward Frowned Upon?

Quoting Ryan420
{quote} Can I see that trader's statistics? How would one profit from losing 97% of their trades?
Feel free to download the bitget app and have a look at the tradeMasters. Most of the post here are looking at the expectation of what the move will do and ignore the accuracy of the recommendation itself.
Threesome Daddy
Quoting SingaRich
{quote} Feel free to download the bitget app and have a look at the tradeMasters. Most of the post here are looking at the expectation of what the move will do and ignore the accuracy of the recommendation itself.
I mean trader statistics. I haven't seen a profitable account below 40% win rate this year.
Quoting ccrkk10
Hello all. It seems that the trading community as a whole is widely against using a 1:1 risk/reward ratio and constantly preaches to aim for at least a 2:1 ratio whether it be on forums, youtube videos, chat rooms etc. I recently started thinking why is this the case? I personally come from a blackjack card counting background. At the very best counters will get a 3% edge over the casino (win about 53% of the time). Sports bettors are considered amazing if they can hit at a 55% rate and are legendary if they can get 60%. There are plenty of people...
I frown upon the idea of less than 1r. It is so risky.
Trading is gambling. So gamble responsibly.
Quoting Sovy
{quote} I frown upon the idea of less than 1r. It is so risky.
How is it Risky? How does is this risk quantified? Why is it that people forget that one can adjust their take profit or stop loss thus changing the R:R
Threesome Daddy
Quoting ccrkk10
Hello all. It seems that the trading community as a whole is widely against using a 1:1 risk/reward ratio and constantly preaches to aim for at least a 2:1 ratio whether it be on forums, youtube videos, chat rooms etc. I recently started thinking why is this the case? I personally come from a blackjack card counting background. At the very best counters will get a 3% edge over the casino (win about 53% of the time). Sports bettors are considered amazing if they can hit at a 55% rate and are legendary if they can get 60%. There are plenty of people that made tons of money at these professions with a relatively small edge. From what I've seen in the trading community, if someone has a system or strategy that hits around 55-60% of the time at 1:1, the first comments usually say to increase the risk to reward ratio... do people not understand how amazing it would be to have a 5-10% edge like that??? Do people in the trading community just set unrealistic expectations like having a 3:1 risk to reward ratio and expect that to hit over 50% of the time?? I would love to hear your thoughts as to why this is the case.

Hello. The risk-reward ratio (risk-to-reward ratio) in trading refers to the ratio of potential profit and possible share on each trade. The answer to the question of which ratio is better - 1 to 1 or 3 to 1 - depends on your trading strategy and your level of comfort with risk.
1 to 1 means you are trying to make a profit equal to your potential loss. This may be an acceptable ratio for traders who prefer a more conservative approach and resource consumption. In such cases, you will take less risk on each trade, but the potential profit will be limited.
3 to 1 means you are aiming for 3x your potential loss. This is a more aggressive ratio and assumes that you are willing to take on more risk to achieve more expected returns. Such an estimate can be high for traders who have a high degree of probability in their trades and are willing to take on more risk.
It is important to understand that there is no universal "best" ratio in trading. It depends on your personal trading strategy, experience level, financial goals and comfort with risk. For some traders, a conservative 1:1 ratio approach may be appropriate, while others may prefer a 3:1 ratio approach.
Quoting TheWraith
{quote} Indeed. I am trying and failing while trying. I have confidence in the system I use though. Look, after 100 trades if I am not profitable I will give up. If I can manage to have 4/10 profitable trades consistently or more then I will be more than fine.
Let's say you have a fixed risk-to-reward ratio of 1:2, if you trade 125 trades and have a win rate of ~50% I'll personally fund you through my company.
  • Post #87
  • Quote
  • Edited 2:35pm Jun 26, 2023 1:58pm | Edited 2:35pm
Quoting NevFX
{quote} Let's say you have a fixed risk-to-reward ratio of 1:2, if you trade 125 trades and have a win rate of ~50% I'll personally fund you through my company.
I guess I'll start then?
If you're serious, how are we doing this?

I can post all of 125 trades here. Now, since this is accuracy test, I will use 0.01 lot size, because it's irrelevant for accuracy. Looking forward to hear from you!
Quoting TheWraith
{quote} I guess I'll start then? If you're serious, how are we doing this? I can post all of 125 trades here. Now, since this is accuracy test, I will use 0.01 lot size, because it's irrelevant for accuracy. Looking forward to hear from you!
don't post it here,
https://www.macrobriefing.com/contact fill out the form and make sure to mention your forex factory handle, otherwise, I am sure you'll get lost in the trolls and bots
Quoting NevFX
{quote} don't post it here, https://www.macrobriefing.com/contact fill out the form and make sure to mention your forex factory handle, otherwise, I am sure you'll get lost in the trolls and bots
Okay, thanks. One more question though, is there a time limit for this 125 trades?
  • Post #90
  • Quote
  • Edited Jun 27, 2023 6:43am Jun 26, 2023 5:38pm | Edited Jun 27, 2023 6:43am
Quoting TheWraith
{quote} Okay, thanks. One more question though, is there a time limit for this 125 trades?
no, which would probably put more people off than not
Anyone using a fixed RRR will know, that if you don't get some volatility, you can get stuck in a trade for quite a while.
Getting to BE is one way out of it, and obviously closing a trade but we can discuss this off-line
Seeing a lot of interesting ideas of RR. Some good some bad.

Many people saying things like, even just a 50% win rate with a 1:2 rr will suffice very casually. As if having a 25% edge is just “okay” and will suffice.

this would be better than a freaking money printer.

reality is you’ll be lucky to get a 2-3% edge if even that at any point.

lastly, here is a simple formula to know how good of winrste you need to break even.

BRE (break even winrate) = risk / (risk + reward).

anything above this value means you will make money.

people talking like they will get 20% above this value are kidding themselves.
ri · skuht
I know highly successful traders that trade at less than 1:1....30 pip stop for a 20 pip gain... but here is the catch, they rarely get stopped out. if a trade is not working out they close it quick and move on and almost never even take a 20 pip loss, they are Fundamental traders.......I personally have used Elliot wave for the better part of 15 years, I know exactly when my view(count) is incorrect and usually let it play out once in, I am a swing and position trader, so I don't have to sit in front of the computer, I'd rather fish hunt and golf......I am in 4 positions right now I expect to play out by the end of OCT....... my RR ratio is usually 5:1 or even 10:1......learn to trade longer time frames for better RR adjust the size of you position according to how large the stop needs to be and enjoy life
Quoting Riskcuit
Seeing a lot of interesting ideas of RR. Some good some bad. Many people saying things like, even just a 50% win rate with a 1:2 rr will suffice very casually. As if having a 25% edge is just “okay” and will suffice. this would be better than a freaking money printer. reality is you’ll be lucky to get a 2-3% edge if even that at any point. lastly, here is a simple formula to know how good of winrste you need to break even. BRE (break even winrate) = risk / (risk + reward). anything above this value means you will make money. people talking like...
Exactly. Here's from BabyPips:

"If you give yourself a 3:1 reward-to-risk ratio, you have a significantly greater chance of ending up profitable in the long run."

Tell me a broker didn't pay them to post that as part of their Babypips School. It's mathematically impossible to take a 25% win rate (75% loss rate) and make profit. In their example on the page, they use a 1:3 Risk:Reward with 50% win rate: https://www.babypips.com/learn/forex...-to-risk-ratio
The sad truth is, all major online Forex forums, including FF are charlatans helping to keep the scam moving forward. Even the "Risk 1% per trade" is part of it. Bucket shops know their customers can bleed out at 1% for a very very long time before losing an account, in the meantime funding it again.

The new charlatans are on Instagram and Youtube (lamboraul, fxalexg, ect) https://www.instagram.com/forex_fraudsters/ It's a great scam.. I often think of starting one myself.
1:2 or 1:3 reward ratio is better than 1:1 because smaller loss is easier to handle emotionally, larger loss can make you less comfortable and also corrupt your feeling of safety and correctness of trading decision.
Quoting pizd0s
1:2 or 1:3 reward ratio is better than 1:1 because smaller loss is easier to handle emotionally, larger loss can make you less comfortable and also corrupt your feeling of safety and correctness of trading decision.
A 1:3 Risk:Reward ratio is only 17% probability of winning. You'll lose more often than a 1:1 which has a 50% probability of winning. This is exactly what your bucket shop wants you to do.
Quoting Ryan420
{quote} A 1:3 Risk:Reward ratio is only 17% probability of winning. You'll lose more often than a 1:1 which has a 50% probability of winning. This is exactly what your bucket shop wants you to do.
that is not completely accurate. risk-reward ratio does not dictate the probability of winning. It represents potential profit or loss in relation to the amount of risk taken. For example, 1:3 risk-reward ratio means that for every 1 unit of risk you take, you have the potential to gain 3 units if the trade is successful. This does not imply a fixed probability of winning or losing.
Risk:Reward is a real thing.

And there a big differences between instruments.
I've compared & traded a lot of instruments, FX, Gold, Silver, Commodities, bonds, indices etc.

You really need the instrument with the best spread/overall commissions vs price movement.

For me the best instrument is the ES Future or SPX 500 index.
It offers a very low spread (incl. commissions) vs. huge price movements.
And that every day.

1 good trade can make up for 10 - 20 losers.

Nothing comes close to the US futures/indices esp. for intraday R:R day traders.
Quoting ccrkk10
Hello all. It seems that the trading community as a whole is widely against using a 1:1 risk/reward ratio and constantly preaches to aim for at least a 2:1 ratio whether it be on forums, youtube videos, chat rooms etc. I recently started thinking why is this the case? I personally come from a blackjack card counting background. At the very best counters will get a 3% edge over the casino (win about 53% of the time). Sports bettors are considered amazing if they can hit at a 55% rate and are legendary if they can get 60%. There are plenty of people...
Hi, I have been discusing this same topic with a few colleagues recently.

I think 1:1 is something you can achieve barely 100% of the times, while 1:2 it is not like that. 1:3 is harder and 1:4+ starts to require multi-timeframe analysis. Besides highest RRR such as 1:10 or 1:20 are normally subject to very high exposure or even leverage.

I think that 1:1 is convenient unless you have a buffer already earned, then you can try 1:1.5 or 1:2. This speaking about one timeframe analysis only.

Said that, using two timeframes you can get 1:2 or 1:3 without too much effort but, in my opinion, 1:1 is super-safe and I think it is really worth considering it because you can get a setup completed in less than 30 minutes.
Quoting scherzi
{quote} Hi, I have been discusing this same topic with a few colleagues recently. I think 1:1 is something you can achieve barely 100% of the times, while 1:2 it is not like that. 1:3 is harder and 1:4+ starts to require multi-timeframe analysis. Besides highest RRR such as 1:10 or 1:20 are normally subject to very high exposure or even leverage. I think that 1:1 is convenient unless you have a buffer already earned, then you can try 1:1.5 or 1:2. This speaking about one timeframe analysis only. Said that, using two timeframes you can get 1:2 or...
Secondly, many times it is your setup that dictates your TP and SL, meaning risk and reward.

See, this is a typical ICT setup (1:2 RRR) with annotations of the premium levels that should be key to consider exiting before the TP if price requires it.

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Now, you can refine it and increaste the RRR keeping the odds similar. This is the same setup but refining down from W1 to H1. The setup is based on the weekly chart (and everything else), but the entry is made inside the breaker but when H1 becomes bullish.

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Anyone with minimum ICT knowledge can verify this is a basic valid setup (this is the one above, zoomed).

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1:1 RRR with simple orderblock setup on H1 tf after London markets open time. With potential extension below the closest support where SLs reside and there is liquidity to close our short positions with their sell stops.

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Now, the same refining with M1.

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Wider, RRR multiplied by 5
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This for intrasession trading (H1 htf, m1-m5 ltf).

Glossary:
BOS - break in market structure.
OTE - Optimal trade entry (62% retracement of the range of reference)
Equilibrium - Middle of the range of reference. Below is discount, above is premium.
BE OB - Bearish ICT order block
BU OB - Bullish ICT order block
Consequent encroachment - midpoint of the imbalance area.
Imbalance - Inefficiency in one or two sides (buyside, sellside). Price will eventually come back to fill the open interest left when it passed through in the past.
Support/Resistance - A level where traders think price will hold and be rejected and they put their stop losses beyond. Price normally will break it to take out these protective orders to allocate the orders being carried. For instance, buy stops will be used to close long positions when price is expensive, sell stop sto close short positions at the lowest possible price.
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