1:1 Risk Reward Ratio - Why it just makes sense

I have no idea! LOL

Actually pipmutt ! I am from the UK as well! Ha ha! But yes at the moment we live in different continents.

That's cool....don't be sticking no pins in no effigy dolls now y'hear

Anyway I'm going trading, have a great day all......

[quote=2+2=4ex;5749334]May we call you the executioner then? LOL



Yeah i got to admit sometimes I entertain myself. Executioner it is! LOL!

Ah wouldn't do that to you! Whats your address though! LOL!

For me , my success is based on a simple (though sometimes i don't follow it) rule .RR has to be 2-1.If I lose twice , and win once then I am good.With a good trading strategy like mine , you are unlikel;y to lose 3 trades in a row anyway, and besides, with this kind of RR , you also take care of ranging markets.People tend to forget that the market ranges 75% of the time and get too excited when it's trending.

Just my thoughts

http://www.forexfactory.com/showthread.php?t=351907

Happy Trading

Why is everyone letting pipmutt troll them?
We all have different strategies, thats what makes trading so great.
He clearly has a superiority complex, because his way is the ONLY right way. Grow up big dog!

Happy trading.

Troll them? Not trolling anything, just presenting and supporting an opinion, counter it seems to the majority here. Do you have an opinion about the subject or anything to say that's related maybe?


Really, is that what makes trading so great for you?


I'm no shrink but I'm not really sure how the two could be connected but anyway......where did I say there's only one way, or a 'right' way, or even describe 'my way'?


Of course, is there any other way to be?

"I'm no shrink but I'm not really sure how the two could be connected but anyway......where did I say there's only one way, or a 'right' way, or even describe 'my way'?"

You have been arguing with jimmy how your way is better for a long time(letting profits run). Which is fine man, do whatever works for you. I hope its profitable for you. I'm not here to argue, like you seem to be.

I am curious though, you say systems are dumb or pointless, I forget the words you used. So what do you use as an entry? Purely price action? Your Heart? News? A coin flip?

And I'm not much of a forum poster, so excuse my lack of knowledge on proper quoting.

Hi, OP here. Everyone has their own way of managing their trades. The common teaching is of 1:2 or greater RR. That is the common thinking among the retailers. The common outcome is failure. I mainly scalp the M1 time frame. I also take some longer term 'positions', using the M5 and M15 if something really worthwhile forms, but this trading style is quite rare for me. Last year I used this style a lot but market conditions changed and I don't like drawdown. When I do use that style here and there though, I do not use a fixed TP or SL but instead place them where I see fit, based on the pattern I am trading.

When it comes to my main trading style, which as I said is scalping the M1, I always use a fixed stop and target with a 1:1 RR. No matter what happens, over the next 'x' number of minutes, the price is going to go up a little bit or down a little bit. That is pretty much a surity. If I took a random entry with a fixed target and a fixed equal stop, one of the two will be hit. So I use a trading method that simply gives me a slightly higher chance of hitting my target than hitting my stop. Using a 1:1 RR means my edge only has to overcome my transaction costs and a bit extra. This little bit extra, when added up in an accumulation of many trades, translates into a worthwhile amount of profit.

The thing is, I am not an excellent trader. I'm not able to read the market so well that I get it right a huge majority of the time. And so I have to use a technique that allows me to take lots of losing trades whilst still coming out on top at the end. I take anything from 2-10 trades per pair in an average day . Over the span of 10 trades, however long that takes, I expect to only get 6 wins. My fixed SL and TP are set up so that 5 wins out of 10 leaves me at exactly breakeven for the day. So 6 wins out of ten gives me a nice profit for the day. 7 or 8 (these are great days) means I am all set for the inevitable days when I might only get 4 wins. It's about balancing out so that over all I am always slightly ahead.

Using the theory that on the M1 chart there is so much noise that a 1:1 RR coin flip method - when used over a large amount of trades - will result in about a 50/50 win/lose rate, I only need a method that is slightly weighted to the win side. And without going into my actual method too much (I've tried before but people aren't that interested) I pick tops and bottoms on a small scale during ranging phases. I will allow all the unsuccessful (but with high forum post count) retailers out there to say "OHHHH You can't pick tops and bottoms, you have to trade with the trend, follow the MA crosses, trade breakouts, only trade the 4HR....etc etc." to shoot me down and I will happily take no notice. I don't listen to that general masses nonsense anymore because I'm not into losing money anymore.

I don't think you understood the maths in my first post in this thread. With my trading method, if I started using a 1:4 RR I would lose. As I tried to explain already, with a 1:4 RR you're going to have a much greater chance of being stopped out than hitting your TP. I am not a trend follower or a herd follower (anymore) so I do not need 1:2 or 1:3 or 1:4 RR. In fact it would kill my profits fast. I hope you can understand how that works.

Bingo! Someone on the thread is getting it.

Pip is playing games you aren't reading him right he has long term holds which make alleged pips and short term trades which make alleged pips therefore more he is saying do both.

by you not reading his posts properly he wins


I shall stick to short term only though!

Sorry, but I don't have time to read beyond the first post/question. Using your example, you put all that pressure on yourself to come up with the skills to develop and execute a strategy that can deliver 1:2 RR so you can make 2530 pips rather than the 80 (49 losses at 51.2, 51 wins at 98.8). BTW, if you can come up with a strategy to deliver 1:1, you are well on your way to coming up with a 1:2 strategy, too. Good luck.

I agree too, if you have a high win rate delivering 1/1, then youre in line for the bigger r/r...

I'm guessing that the OP has fear issues with losing... everyone goes through that.

Very hard to find a proven successful professional trader that advocates 1/1.... you will have bad periods when your win rate drops, guaranteed, if you rely on that high win rate then the drawdown will take twice as long to make up.... good luck with your confidence when youre building your losses back up...

imho..

Aggressive money management is the way to go.

( think all longs )

Tight But realistic safe ish SL.
If the market puts in a lower high, move the SL up under it.

And if you get a good run, bank it, it'll come back most of the time to get back in, if not plenty of other trades.

The bank it and move on gets you a much higher win rate as your actually trading, not just flipping a coin and seeing what happens.

Hello Roofx,

Sorry to disturb but this guy "pipmutt" is amazing.
He is in my top list, he makes me laugh a lot.

"Originally Posted by w.penn
Why is everyone letting pipmutt troll them?"

ROFL

Huh?


Evidently.


You're excused....

I don't remember mentioning any particular ratio, just letting profitable trades run when the opportunity arises and the market offers profit. Personally my trades are closed when the market, and my analysis of it, indicate they should be closed rather than some arbitrary ratio number.

Scalping, although (potentially) extremely profitable, could be excluded from pretty much all the widely accepted norms of trading and risk/reward/money management, a lot of the time I found the numbers skewed way beyond any generally accepted norm.