DislikedHi All,
@ ownshook
I answered some one the other day on this R/R thingy already.
For this thread I will repeat myself.
PURE nonsense.
R/R ratios is a money management tool for risk & compliance depts, to gauge the trading performance of an individual over time. It calculates the "value at risk" against P&L against time to determine the skill rating and compensation for dealers/traders. The formulation is standadise to measure all deal "at value" to equalise dealers at par to limits.
R/R ratios on singular trade exposure means nothing.
Accuracy (profitability) and ability in turning to favourable trend following is paramount in singlar exposures.
If you want to calculate risk to your stop loss probabilities, then read about my respond to stop loss orders in forex on this thread.
BUT if you were trading structured markets , eg exchange traded instruments (indexes futures. Currency Futures contracts, commodities ,,etc), using stop loss orders can protect or limit your overexposure to losses, this is because these markets are localised.
Rule of thumb , never place stops in OTC instruments (eg forex, OTC indexes, OTC options, CFDs, any synthetics etc)however tempting.
Hope this helps.
regardsIgnored