Good discussion on one of the most important subjects in trading the forex.You must find a solution to this before you will consistently achieve success in forex trading. For me, and I have been trading for eight years, I always trade with a stop entered (that may seem cowardly, but its a hadit). I wait for best entry, because you make your money based on good entry.
I have a slighly different approach to R/R depending on whether we are in a bracketing market or a trending market. When bracketing, I will only enter when there is a 1:3 ratio. When the market is trending, I will usually try to keep a 1:2.5 to 4.5 ratio at entry, but will adjust the ratio depending on how far the market move before price breaks. The idea is to let the trade have enough breathing room at all times until I have a good indication that the move is over.
For me, the reward portion of this is a well-developed understanding of where the bankers may take the market when it starts to move. I also have three types of accounts for trading: one for day trading (40-60 pips), two accounts for mid-range trading (several hundred pips); and one account for very long range trades (hundreds to several thousand). This helps me enter trades as chip shots, move on to my 5 iron, and if it makes sense go to my driver. One of the best ways to manage risk is to never exit a good trade until its really over, which can sometime take days or weeks or even months. Obviously, the risk profile of the trade changes as you hand it off from one account to the other. I have trades running right now (eg, EUR/USD and GPB/USD) where I am up several thousand pips with an initial risk of 20 pips.
I have a slighly different approach to R/R depending on whether we are in a bracketing market or a trending market. When bracketing, I will only enter when there is a 1:3 ratio. When the market is trending, I will usually try to keep a 1:2.5 to 4.5 ratio at entry, but will adjust the ratio depending on how far the market move before price breaks. The idea is to let the trade have enough breathing room at all times until I have a good indication that the move is over.
For me, the reward portion of this is a well-developed understanding of where the bankers may take the market when it starts to move. I also have three types of accounts for trading: one for day trading (40-60 pips), two accounts for mid-range trading (several hundred pips); and one account for very long range trades (hundreds to several thousand). This helps me enter trades as chip shots, move on to my 5 iron, and if it makes sense go to my driver. One of the best ways to manage risk is to never exit a good trade until its really over, which can sometime take days or weeks or even months. Obviously, the risk profile of the trade changes as you hand it off from one account to the other. I have trades running right now (eg, EUR/USD and GPB/USD) where I am up several thousand pips with an initial risk of 20 pips.