About that issue with risk:reward, I'm with DrDave on this. Risk:reward and win:loss are two faces of the same coin - number of pips bagged ( and this is the most important thing - sooo true ). A risk:reward of 2 with a win:loss of 80%, or a risk:reward of about 0.33 and a win:loss of 40% will roughly give the same amount of pips.
I think for this method, the risk:reward should not be viewed as strictly that measure of SL versus TP, but as how much distance we have from the entry to TP1 and TP2, and how probable it is to hit at least TP1 ( this is roughly the win:loss ratio for the trades with TP1 ) before hitting SL.
It is linked with that white arrow - I see it as a good momentum indicator, so it influences positively the win:loss ratio by its calculus. And the momentum indication is more reliable if the price crossed daily central pivot - the game is to be played more probably above the pivot, so the chance of hitting TP1 is raised, so new addition to win:loss ratio. If there is enough distance between entry and TP1, compared with SL amount, and TP1 is between bands - second addition to win:loss ratio, and the bands indicate a trend - third addition to win:loss ratio - well, it's a GO.
Yes, I know, if you measure strictly risk:reward on these trades, you will get a value slightly bigger than 1. But this is only one face of reality, look also to the other face....
I think for this method, the risk:reward should not be viewed as strictly that measure of SL versus TP, but as how much distance we have from the entry to TP1 and TP2, and how probable it is to hit at least TP1 ( this is roughly the win:loss ratio for the trades with TP1 ) before hitting SL.
It is linked with that white arrow - I see it as a good momentum indicator, so it influences positively the win:loss ratio by its calculus. And the momentum indication is more reliable if the price crossed daily central pivot - the game is to be played more probably above the pivot, so the chance of hitting TP1 is raised, so new addition to win:loss ratio. If there is enough distance between entry and TP1, compared with SL amount, and TP1 is between bands - second addition to win:loss ratio, and the bands indicate a trend - third addition to win:loss ratio - well, it's a GO.
Yes, I know, if you measure strictly risk:reward on these trades, you will get a value slightly bigger than 1. But this is only one face of reality, look also to the other face....
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Of course not, if a method have consistent results, it doesn't matter if there are pips missed, because next week will give you another bunch of pips.
