The subject of 3:1 Reward to Risk Ratio came up in another thread and I decided to look into it.
Personally, setting an arbitrary number based on when you decided to enter a trade is a weird notion to me. When you decide to enter, you are not only making a decision to enter, you are also deciding the time frame of your entry (With it's own issues like one TF says buy and another says sell), as well as the exit directions and the extent of which on either side. It is a stock market rule that seems to have found it's way to FX trading. It goes with all that speculating and watching the price to go up or down based on your astute research and savviness of tell tale signs that only you know what they are. Similar enough I guess, so why not? And I mean it; WHY NOT?
According to this article, you have to be right 80% of the time on average. http://www.thetransparenttrader.com/...-ratio-trades/
So, you shall not follow the 3:1 RR rule unless you are that damn good.
Anyone has any comments?
Anyone does this strictly and pulls it off? If yes, you have the 80% winrate that it takes?
Personally, setting an arbitrary number based on when you decided to enter a trade is a weird notion to me. When you decide to enter, you are not only making a decision to enter, you are also deciding the time frame of your entry (With it's own issues like one TF says buy and another says sell), as well as the exit directions and the extent of which on either side. It is a stock market rule that seems to have found it's way to FX trading. It goes with all that speculating and watching the price to go up or down based on your astute research and savviness of tell tale signs that only you know what they are. Similar enough I guess, so why not? And I mean it; WHY NOT?
According to this article, you have to be right 80% of the time on average. http://www.thetransparenttrader.com/...-ratio-trades/
So, you shall not follow the 3:1 RR rule unless you are that damn good.
Anyone has any comments?
Anyone does this strictly and pulls it off? If yes, you have the 80% winrate that it takes?