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What is your average risk to reward ratio? 9 replies

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What is your win rate and risk reward ratio?

  • Post #1
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  • First Post: May 17, 2013 8:43pm May 17, 2013 8:43pm
Mine is 72% and 1:1 ratio after 261 trades
lots of risk and no reward...
Quoting genie
Mine is 72% and 1:1 ratio after 261 trades
how long in trade on average?

My swing trading average loss 0.15 risk and average win 1.2 risk and around 60% win rate.

I will know stat for scalping soon.
Quoting genie
Mine is 72% and 1:1 ratio after 261 trades
your profit factor should be 2.57. this is huge. if you put 257 different trades and not multiple transactions at the same time this should be an excelent statistic. this will put you ahead at least 1 in 1000 if not more. but the question is if you can mantain your statistic over 1 year or 2 years.
Quoting genie
Mine is 72% and 1:1 ratio after 261 trades
You won't last long with a 1:1 ratio.
What is any ocean but a multitude of drops?
Quoting Xhale
{quote} You won't last long with a 1:1 ratio.
why not?
Quoting Myo
{quote} why not?

From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc.

This risk model leaves no room for error.

I would feel far more secure with 25% win rate and 5/1 RR...


Personally I try to plan trades around 50% (not too hard to achieve with just a little discipline) and minimum 3/1 RR... again, not hard with some practice.... Then you always have the odd few where you catch a big runner to bump your overall average up.

Remember if you're always getting out of a trade quickly then your probabilities of catching a really big move are diminished...
tradewith60
Quoting Xhale
{quote} You won't last long with a 1:1 ratio.
Yet I've lasted over 2 years with consistent results. Take your negativity elsewhere.
Quoting 60minuteman
{quote} From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc. This risk model leaves no room for error. I would feel far more secure with 25% win rate and 5/1 RR... Personally I try to plan trades around 50% (not too hard to achieve with just a little discipline) and minimum 3/1 RR... again, not hard with some practice.... Then you always have the odd few where you catch a big runner to bump your overall average up. Remember if you're always getting out...
I won't go into the pros and cons, because its not worth it. Thanks for your opinion though.
what was the highest string of losses? You could try doubling it for every loss if it is lesser than 4. Then again, a perfect recipe for .............
Quote
Remember if you're always getting out of a trade quickly then your probabilities of catching a really big move are diminished...

Yeah, well, thatīs kind of the point of having a 1:1 RR.

Quoting 60minuteman
{quote} From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc. This risk model leaves no room for error. I would feel far more secure with 25% win rate and 5/1 RR...
I donīt understand the logic behind this. Maybe youīre right. I have no clue, really.
Quoting 60minuteman
{quote} From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc. This risk model leaves no room for error. I would feel far more secure with 25% win rate and 5/1 RR...

I donīt understand the logic behind this. Maybe youīre right. I have no clue, really.


let's say you win 3 out of every 10 trades... to improve by 100% you only need to hit 60% win rate...The average win rate according to broker data is around 50%, so just above average would double your hit rate.

Not let's say you win 6 out of 10 trades, to increase your win rate by 50% would mean an almost perfect trading record...

It's an exponential curve, higher the win rate, harder it is to improve, opposite true for losers too.
tradewith60
Also Genie, if your data is accurate and you can really maintain it, then you could risk 10% per trade with no risk of wiping your account, and you should be doubling your account every week or two...

Also you should notice how quickly you can flip from never blowing up to guaranteed to blow up when your RR is so low...



Risk Of Ruin Table
Attached Image
tradewith60
Quoting 60minuteman
Quoting 60minuteman {quote} From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc. This risk model leaves no room for error. I would feel far more secure with 25% win rate and 5/1 RR... I donīt understand the logic behind this. Maybe youīre right. I have no clue, really. let's say you win 3 out of every 10 trades... to improve by 100% you only need to hit 60% win rate...The average win rate according to broker data is around 50%, so just above...
OK, but why would it be easier for someone with a 1:3 RR to impove his hit rate significantly compared to someone who uses 1:1? What I mean is, there is a reason why people with high R:Rs have lower hit rates. These trades are just harder to pull off. Itīs like a natural law of trading.
  • Post #15
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  • Edited 11:34am May 18, 2013 11:20am | Edited 11:34am
Quoting Myo
{quote} OK, but why would it be easier for someone with a 1:3 RR to impove his hit rate significantly compared to someone who uses 1:1? What I mean is, there is a reason why people with high R:Rs have lower hit rates. These trades are just harder to pull off. Itīs like a natural law of trading.
I'm not saying the RR makes hit rates easier to improve, i'm saying that relying on a high hit rate is the hardest trading to maintain.

People will feel the safest and most secure with a higher win rate, unfortunately facts and data tell us that it is precisely that the means people will not make profit over longer time periods.

Higher R/R gives a greater margin for error... casino games are often 1/1...

Data from brokers say that the average win rate is around 50% and therefore 1/1 would not be enough to make profit....therefore if you design a system that has higher than 1/1 RR you increase the probability of being profitable over the long run.

Also people make the misconception that for 3/1 RR that means you have to close all trades at 3/1, not at all, I close lots of trades at 1/1 if the technicals and price action say the move is done, but I enter all trades trying to go for maximum return, minimum 3/1 is what I want and along the way I catch some 7/1, 10/1 etc etc.... But the important thing is that R/R is at the forefront of my thinking, If I catch a 5/1 trade monday then I know I have 5 free trades, it's very easy to let those trades run, if i had closed it at 1/1 I know next trade I could be right back at the start with no profit. If I lose my first 2 trades also it doesn't bother me because I know I usually only need 1 win to turn bad days around, compared to 3 or 4 if I was trading 1/1... on many levels a higher RR makes trading a much easier game.

everyone should give it a try or consider it...
tradewith60
the lower the win% the more robust the system.A change in market conditions will not have adverse effect in trading performance.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
Quoting pemully
the lower the win% the more robust the system.A change in market conditions will not have adverse effect in trading performance.
I tried so hard to say exactly that... thanks
tradewith60
At 3 to 1 win loss ratio you only need to win 35 out of a 100 trades to still be profitable (5%), any win loss ratio higher than 35% and using a 3 to 1 ratio will make you money consistently.
  • Post #19
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  • Edited May 19, 2013 12:38am May 18, 2013 11:49pm | Edited May 19, 2013 12:38am
genie it apears to me that you are the one delivering results and not anybody else here. they wanna show math and logic but the truth is that their whole thinking is wrong.it's not empirical based it's logic based. choosing a high reward to risk over a high winrate is a bad thing. with 70% winrate you can drop even to 50% and you don't lose anything . with 70% you can risk much more than with 30% and it's a safer bet than any. of course it's a bad thing if you are presented with such an option but the truth of the matter is that high winrate is very very hard to find. i'm not going to show them they are wrong. the market will. they basically want a winrate lower than chance and they assume that targets will be met provided that targets a "sure" thing. mathematicians and their logic always suck at trading just look at everything that has in it the phrase mathematical model. i have never ever seen someone who comes from a mathematical backround and has success in the markets in the long run. every mathematician hedge fund fails. good luck to you and maybe you can show a trade explorer with statistics in the future. with your statistics you will have no trouble entering a top.
72% means in 100 trades win 72, lose 28. Net is 44 risks. This is 0.44 risk per trade.

This is expected win rate for good TA based system. However one has to have stop on system as all TA based systems have expiry date.

To run winner further does not necessary add value as winners come rarely and therefore equity dips are larger.

Extra skill is required to squeeze couple of more pips. Even 1 extra pip per trade makes large difference long term.
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