The most important is discipline and good money management. If you are looking at limit to stop loss ratio of 1:1, you are going to lose. Most trader get most of their trade wrong.
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DislikedVan Tharp is not a trader - he's just another boffin selling books. There is some good stuff in his books but I wouldn't pay too much attention to it, especially having in mind that he usually refers to stocks - I always get the feeling that OTC currency markets are something a bit too blurry for him.
Anyway, I am sorry to disappoint you guys but anyone using a fixed risk/reward formula is most likely to fail. Market simply doesn't care about anyone's ratios. So placing a fixed win/lose algorithm to follow a system that changes all the time... I...Ignored
Quoting finallyDislikedIn my opinion, this problem is the main dillema in trading and is the reason why nearly every trader, in the end, ends up losing all their money.Ignored
QuoteDislikedHow, exactly, do you handle this problem?
QuoteDislikedIt is nearly impossible to make the math works
Quoting MaxoutDislikedThe most important is discipline and good money management. If you are looking at limit to stop loss ratio of 1:1, you are going to lose. Most trader get most of their trade wrong.Ignored
DislikedCan anyone one think of a way to solve this most basic trading dilemma?
Any and all ideas would be appreciated.Ignored
DislikedOr better yet how do you deal with the fact that there is NO WAY to know for CERTAIN how much profit there will be in a trade.Ignored
DislikedI try to find as many (semi-)independent reasons as I can why to take a trade,
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Trading is not just about a chart, its about your opponent and that is always your broker.
Get inside his head and look for the stuff he cannot hide. When you look hard, you will find plenty.Ignored
DislikedI disagree. I believe it helps to have some idea of risk/reward of your method/s over the long term. It does not have to be rigid as of course a key ingredient is to be able to manage your trade after entry according to your rules. If you have some idea of success rate of trades over the long term by forward or back testing then you can make an informed decision with regards to what risk reward you would use. eg 50% success rate risk reward would need to be greater than 1:2 to be profitable. This is merely a very simple indication not necessarily...Ignored