I want to get some opinions on my risk vs. reward strategy. When I trade I think of my risk vs. reward in terms of 1R. I learned this from "Trade your way to financial freedom." When I take a trade I set my stop at 1R. From there I set a target at somewhere a little above 3R. This way if I have 1 in 3 profitable trades I make money.
Here is my dilema. Usually once my trade has moved 1R in my favor I move my stop to break-even. This way I have a free trade no matter what happens. However, this has the tendency to stop me out more often on a retracement before my target has been hit.
I am debating whether I should just keep my stop and limit the same throughout the trade or trail it by 1R like I have been. I can't really determine which will be better. I am leaning toward continuing what I have been doing.
If I don't move my stops, I will be stopped out with a loss more often but also hit my targets more often after a retracement. If I continue my method I lose a lot less, but limit my gains somewhat.
Opinions?
Here is my dilema. Usually once my trade has moved 1R in my favor I move my stop to break-even. This way I have a free trade no matter what happens. However, this has the tendency to stop me out more often on a retracement before my target has been hit.
I am debating whether I should just keep my stop and limit the same throughout the trade or trail it by 1R like I have been. I can't really determine which will be better. I am leaning toward continuing what I have been doing.
If I don't move my stops, I will be stopped out with a loss more often but also hit my targets more often after a retracement. If I continue my method I lose a lot less, but limit my gains somewhat.
Opinions?