Hi everyone
I need help with the above topic. I’m trading forex and my setups always have 2 target profits. So, when price gets to my TP1 I’ll close half of my position and the rest of it when price gets to my TP2. Now, my understanding is when people ask me what my trading system RRR is then my answer would be 1.5: 1. (When price gets to my TP1 the reward is 0.5 then another 1 when it gets to my TP2). Is this correct?
The reason why I ask this question is because I bought a trading journal software last month and after spending a couple of weeks trying to learn its features and how to use them, I just realised that the software calculates RRR based on entry price and exit price, not in terms of dollar risked. So for my case the software can’t record every trading setup that I take in one journal entry. I need to record the entry price, exit price, and my TP1 in one journal and then create another one when price gets to my TP2. Now this is the part that I get confused. The software says that my RRR when price gets to my TP1 is 1 and when it gets to TP2 the RRR is 2. Following is the explanation that I got from the software creator:
The R-Multiple measures the trade in terms of Risk (R-Multiple stands for Risk Multiple). So the general formula is
R-Multiple for a buy trade: (Exit Price - Entry Price) / (Entry Price - Stop Loss Price)
An R-Multiple of 1 then means that your exit price was the same distance from your entry as your stop loss.
Is this how you guys calculate your Reward Risk Ratio? Thank you for your time and help.
I need help with the above topic. I’m trading forex and my setups always have 2 target profits. So, when price gets to my TP1 I’ll close half of my position and the rest of it when price gets to my TP2. Now, my understanding is when people ask me what my trading system RRR is then my answer would be 1.5: 1. (When price gets to my TP1 the reward is 0.5 then another 1 when it gets to my TP2). Is this correct?
The reason why I ask this question is because I bought a trading journal software last month and after spending a couple of weeks trying to learn its features and how to use them, I just realised that the software calculates RRR based on entry price and exit price, not in terms of dollar risked. So for my case the software can’t record every trading setup that I take in one journal entry. I need to record the entry price, exit price, and my TP1 in one journal and then create another one when price gets to my TP2. Now this is the part that I get confused. The software says that my RRR when price gets to my TP1 is 1 and when it gets to TP2 the RRR is 2. Following is the explanation that I got from the software creator:
The R-Multiple measures the trade in terms of Risk (R-Multiple stands for Risk Multiple). So the general formula is
R-Multiple for a buy trade: (Exit Price - Entry Price) / (Entry Price - Stop Loss Price)
An R-Multiple of 1 then means that your exit price was the same distance from your entry as your stop loss.
Is this how you guys calculate your Reward Risk Ratio? Thank you for your time and help.