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

  • #461
  • Jun 16, 2012 1:59pm Jun 16, 2012 1:59pm
Quoting Roofx
...please bear in mind that my 100/100 example was to make the numbers easier for the average reader.[...] I actually trade the M1 with a fixed target of 10 pips per trade.
Thanks for the "average reader" but one order of magnitude just changes absolutely everything! You cannot generalize from ten to one hundred.

Quoting Roofx
This is my personal belief and not an invitation for you to challenge my personal beliefs.
You started this thread to change people beliefs about 1:1 RRR but refuse these other people to challenge yours. Please be fair.


@Pipmutt,
Quoting pipmutt
Originally Posted by Roofx : My risk percentage starts at 1% and gets smaller and smaller as the account grows until I raise it back up to 1% (or as close as the lot size increments will allow) at the beginning of the next month by increasing the lot size.

After all that talk about being able to compound faster it sounds like you're reverse compounding after each trade! You reduce trade size as you make money and then only once a month you compound??? How is that faster compounding than increasing size on each trade or within a trade?
Quite counter intuitive indeed. But far from stupid. This is actually a good idea when you go 1:1. If you win then lose, you make zero. But if you win, increase a bit the lot size then lose, you net a loss. That's not about compounding but about capital preservation.
No greed. No fear. Just maths.
  • #462
  • Jun 16, 2012 2:30pm Jun 16, 2012 2:30pm
hello
i have not read a lot of posts so sorry if i repeat soemthing already said.

1:1 is best R/R ratio for me.

i don't know how can people predict a move.

if i have to open a position and i need a 50p SL, TGT is BY DEFAULT at 50P!
period.

then...... if market gives me reasons to do, i enlarge my target, but only with stop loss @be and half position cutted.

i don't understand why people ranting about 2 pips spread or commission when a trade can pay more than 30 or 50 or 850. maybe the problems come in scalping....
good luck
90% of traders use TA, indicators and prediction
  • #463
  • Jun 16, 2012 2:59pm Jun 16, 2012 2:59pm
Quoting Roofx

I have already had requests by pm to block you on this thread. I can totally understand why.
Why? My posts are on topic, I'm not being abusive or rude to anyone, I'm simply challenging ideas and beliefs and presenting an alternative opinion. Isn't that what discussion forums are all about, discussing.

Instead of shooting the messenger why don't you try and shoot the message, then if necessary we can debate the issue and maybe someone will learn something. PipMeUp is a perfect example, he just highlighted something to me which admittedly I hadn't given enough thought to and now I've learned something. See how that works?
  • #464
  • Jun 16, 2012 3:00pm Jun 16, 2012 3:00pm
Quoting PipMeUp

Quite counter intuitive indeed. But far from stupid. This is actually a good idea when you go 1:1. If you win then lose, you make zero. But if you win, increase a bit the lot size then lose, you net a loss. That's not about compounding but about capital preservation.
That's a good point and one I hadn't thought of, thanks.

So compounding when targeting 1:1 seems like it's fairly limited rather than being faster at compounding when using ratios exceeding 1:1?
  • #465
  • Jun 16, 2012 3:12pm Jun 16, 2012 3:12pm
Quoting pip_seeker

But yet their credability is ok with you and you don't see these problems as blatant? lol. Mr Black meet Mr Kettle. lol.
Different discussion but one I'm happy to have elsewhere!


Quoting pip_seeker

Initially making money is the only thing.
Not at all, managing risk should be the first consideration. Performance is measured by how much risk was taken to achieve return. Very basic stuff when it comes to trading.


Quoting pip_seeker

There in lies the rub... I didn't say to "cut profits short"... I said taking profits never made anyone go broke. Will you miss some moves? Sure, but I am also sure you miss plenty of moves already... so what?
Yeah it wasn't about missing moves....

.....it's ok it doesn't matter, maybe you can google it one day
  • #466
  • Jun 16, 2012 4:26pm Jun 16, 2012 4:26pm
Quoting ha-pattern
While I agree with this,
such a position is likely rare. Most people, let alone traders, need their ideas to agree with each other.
To be able to make a cogent argument separately for the SL and for the TP, is a valuable skill in trading.
Thus, most would turn to a more artificial exit and/or entry such as a set R:R or other metric, so that it doesn't conflict with but merely turns on/off the failed trade.

I got this notion from a popular thinking typology, here,...
I tried this, to make my SL reason just as well-formed as the TP reason, and the higher probability reason to TP. It eloquently removes (simulator) margin calls. Though I make much less, I don't care, because I know much more about what's going on, even using the SL's reason for the next trade's TP.
This sounds very basic, but no, it's a rather subtle solution to a basic problem.

To address the thread's topic, my R:R jumps all over the place, as per reason's value. Whatever the reason says is where to put the risk, and I don't get how someone can pick and choose their own R:R over most trades. Perhaps it's because I've a manual chart-drawing approach, which is highly discretionary.
  • #467
  • Edited Jun 17, 2012 1:29am Jun 16, 2012 5:26pm | Edited Jun 17, 2012 1:29am
Quoting ha-pattern

I tried this, to make my SL reason just as well-formed as the TP reason, and the higher probability reason to TP. It eloquently removes (simulator) margin calls. Though I make much less....
Did you identify a reason for making less, ie market conditions, your analysis, the strategy, other? Over what length of time did you try it? Backtest or in real time?


Quoting ha-pattern

I don't get how someone can pick and choose their own R:R over most trades. Perhaps it's because I've a manual chart-drawing approach, which is highly discretionary.
Letting the market and our analysis of it in real time dictate where to place stops and likely areas to initially target and/or lock in profit would seem like the most logical approach to me but there are people who have varying degrees of success with purely mechanical non-discretionary strategies, some even attempt to automate them. I can't say I've ever seen a purely mechanical or automated strategy which has stood the test of time though, they all seem to (spectacularly) crash and burn eventually (as market conditions change?). If consistently profitable ones exist which have even a mediocre performance, that have stood the test of time, I imagine they're as much of a closely guarded secret as some of those HFT algos we hear about!




Seeing as Roodfx the OP has banned me from his thread for disagreeing with him and highlighting his ineptitude and shortcomings I'll reply to replies to my posts here before I go, it seems only polite.......

Quoting Roofx

No, I am done with feeding your need to do what you are doing. I've met people like you before and they are no fun to spend time with at all. I hope whatever it is in life that is making you so argumentative gets better. Because I feel a bit sorry for you. My advice for what it's worth is try to be less angry You'll live longer.
It's a discussion forum for discussing, the only angry one seems to be you when someone challenges or questions what you say or do. So big deal, you threw your dummy out of the pram and banned me from your thread for disagreeing with you, your approach, and highlighting your ineptitude.

Your prerogative, I'll live



Quoting ha-pattern

I guess,
better to have tried and failed, than to never have tried at all.
And, one builds on one's failures.
True, we all learn from our mistakes and experiences....or we're supposed to anyway!



Quoting Turveyd

I believe Pipmutt, has a very low win rate, he sticks he toe in the water and it's to cold most of the time so gets a very small SL, but the ones that turn and run keep running make many times his SL costs and despite his low win rate still makes him money, ( I think that was Pips method )
On some occasions it is, other times for example I'll trade a range on the timeframe I'm looking at, it really does depend on the market. I think it necessary to have that flexibility and dexterity when trading this market as conditions change so frequently and can turn on a dime. There are some impressive trends so it seems counter productive not to take advantage of them, and inbetween times trading ranges, plenty of opportunities if one remains as flexible as the market itself.



Quoting pip_seeker

You never go broke taking profits...

According to you it was about missing moves...
Google is your friend, try searching for "never go broke taking profits" or "you can't go broke taking profits" maybe you'll learn something!



Quoting Roofx

Congratulations pipmutt. You have succeed in what you set out to do and that is destroy this thread and bury any potential helpful discussion deep within
On the contrary and as I mentioned before....
Most people who are confident in their knowledge, experience, and their strategy would be perfectly happy to answer the critics and sceptics, it tests their resolve and may highlight some deficiencies in their strategy. The other side of the coin is it may strengthen their resolve and confirm their ideas are sound.
Novices being novices are easily led, they don't really know what they're looking at, and they don't know the questions to ask so it's useful to have someone asking pertinent questions on their behalf.

If you don't possess the wherewithal to sustain a debate about your ideas then you really can't have much faith or confidence in them!





Well thanks for the chat guys, most of it has been interesting and fairly well spirited!

Good trading all, and watch out for those Monday morning gaps!

Pipmutt out.......
  • #468
  • Edited 8:13pm Jun 16, 2012 6:06pm | Edited 8:13pm
Quoting pipmutt
Did you identify a reason for making less, ie market conditions, your analysis, the strategy, other? Over what length of time did you try it? Backtest or in real time?
"less" -- Set a reduced-profit reason and then watch trade to initiate it? Or have a reason that frames an entire set of reasons before price fulfills the larger reason? Either way, no. I've done such things lots of times in the past.
"Backtest" -- I only trade simulator. When I'm ready, that is, make several dozen trades in a row over and for several sessions, I'll return to demo.

The benefit of this simple approach to mm is to stop wild trades. I've yet to see if I can make enough money with it, or have to think of a way to modify it to increase production.


adjust Yeah, earnings per hour is good enough...
I guess the psychology of a reason for SL just as good as for TP is that I have to trust price when it goes against me as well as for me.

another adjust It didn't stop margin calls, though.... I'll tamper with it a bit and try again.


I guess,
better to have tried and failed, than to never have tried at all.
And, one builds on one's failures.
  • #469
  • Jun 16, 2012 8:18pm Jun 16, 2012 8:18pm
A SL cuts a loss, sadly this is something you can't trade without, I've tried on a few occasions, some good profits then account vaporized.

Profits on the other hand are something you don't want to cut short and at times it's better to take 5pips than have a 20SL hit.

I believe Pipmutt, has a very low win rate, he sticks he toe in the water and it's to cold most of the time so gets a very small SL, but the ones that turn and run keep running make many times his SL costs and despite his low win rate still makes him money, ( I think that was Pips method )
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #470
  • Jun 16, 2012 9:21pm Jun 16, 2012 9:21pm
Quoting pipmutt
That's a good point and one I hadn't thought of, thanks.

So compounding when targeting 1:1 seems like it's fairly limited rather than being faster at compounding when using ratios exceeding 1:1?
Wrong again! Can't believe you still don't get it! You can't base the compounding process on two trades.
My trades are 100% profitable 65% of the time!
  • #471
  • Jun 16, 2012 10:12pm Jun 16, 2012 10:12pm
Quoting pipmutt
Not at all, managing risk should be the first consideration. Performance is measured by how much risk was taken to achieve return. Very basic stuff when it comes to trading.
I'll give you that... risk certainly plays a role for sure. But if you're not making money what are you doing?



Quoting pipmutt
Yeah it wasn't about missing moves....

.....it's ok it doesn't matter, maybe you can google it one day

According to you it was about missing moves... as you were the first to mention it. I've take the liberty below to refresh your memory....


Quoting pipmutt


80-90% odds of what? Price frequently moves in one direction, consolidates, and then has another leg in the same direction, without any meaningful retracement. (Incidentally from a price action and market participant perspective why do you think that happens? The question is relevant to this discussion.) If you're sitting there waiting for an opportunity to get back in and that opportunity doesn't present itself then you either get left behind or you get tempted to chase the market. Neither are good.
  • #472
  • Jun 16, 2012 10:25pm Jun 16, 2012 10:25pm
Quoting ha-pattern
To address the thread's topic, my R:R jumps all over the place, as per reason's value. Whatever the reason says is where to put the risk, and I don't get how someone can pick and choose their own R:R over most trades. Perhaps it's because I've a manual chart-drawing approach, which is highly discretionary.

I would say this to be true of myself and the biggest reason for it is size of the range or move or whatever term you want to put there.

You could say timing plays a role, because if the position is swap negative there's an even bigger reason to cut it and look for another opening.

This isn't to mean that I shoot for 1:1 on every trade. Just like a diamond requires more than 1 facet to sparkle. But at the same token I will stick to what I said before about you never go broke taking profits... and you then start to realize there is always another trade.

Be patient they come in due time....
  • #473
  • Jun 16, 2012 11:59pm Jun 16, 2012 11:59pm
Quoting pipmutt
Why?

Instead of shooting the messenger why don't you try and shoot the message, then if necessary we can debate the issue and maybe someone will learn something. PipMeUp is a perfect example, he just highlighted something to me which admittedly I hadn't given enough thought to and now I've learned something. See how that works?
No, I am done with feeding your need to do what you are doing. I've met people like you before and they are no fun to spend time with at all. I hope whatever it is in life that is making you so argumentative gets better. Because I feel a bit sorry for you. My advice for what it's worth is try to be less angry You'll live longer.
  • #474
  • Jun 17, 2012 12:13am Jun 17, 2012 12:13am
Quoting PipMeUp

You started this thread to change people beliefs about 1:1 RRR but refuse these other people to challenge yours. Please be fair.


.
I started this thread to share some helpful tips and some ideas other traders who might be struggling with the standard overhyped, overspoken set rules like I once was. Changing my risk reward transformed my trading for the better and it may help others too. No one needs to listen to my ideas but I have mentioned them none the less. Thanks to people like pipmutt the thread has focused all my energy into this tedious debate and mainly repeating myself again and again and again because people (ie. pipmutt) keep misreading my comments and making things up about what I have said. All this "challenging" me to prove my trading results and ability is absurd given the purpose of this thread. You guys are a sorry bunch (not all of you, just the select few who are so miserable that they need to do all this weird macho competitive stuff, perhaps to make up for inadequacies in real life, who knows.

I put my tips out there. Take is or leave it but good luck to any serious traders who haven't quite managed to get there and are looking for some alternite ideas. Maybe it will help.

I'm done with this. The thread is a waste of server space and should be deleted as it serves no purpose other than to allow a select few to vent their misery onto others for no reason than to take pride in rubbing people up the wrong way and trying to bring their moods down.

At one time I was prepared to offer some webinars to teach my methods to struggling want-to-be scalpers. I shall not be doing any such thing. There are too many people here who just want to ruin the day.

Congratulations pipmutt. You have succeed in what you set out to do and that is destroy this thread and bury any potential helpful discussion deep within not only agressive argument but a never ending string of incorrectly quoted comments and outright nonsense. I urge you to improve your reading skills and ability to retain information.

Goodnight traders.
  • #475
  • Jun 17, 2012 1:49am Jun 17, 2012 1:49am
Quoting Roofx
I started this thread to share some helpful tips and some ideas other traders who might be struggling with the standard overhyped, overspoken set rules like I once was. Changing my risk reward transformed my trading for the better and it may help others too. No one needs to listen to my ideas but I have mentioned them none the less. Thanks to people like pipmutt the thread has focused all my energy into this tedious debate and mainly repeating myself again and again and again because people (ie. pipmutt) keep misreading my comments and making...
Hey Roofx

Apologies I was probably one of the "culprits" in what you're talking about. I would just like to thank you for the thread, it got me onto thinking about some things and it was interesting to hear some different opinions. I know your intentions were good. Don't worry about people not playing along to your tune I think it's a filtering process once you've been on the forum for a while and perhaps traded for a while it's just a reflex action to block out the thoughts of those you don't kind of "know" as knowledgeable traders. Don't take it personally.

A lot of what you said is true, you will likely just become more annoyed with the forum over time as you get better at trading. I for one have run my course here.

Anyway, forum "victories" are important to some people. I think it makes them feel superior perhaps. But you give them the reaction they are looking for with posts like that. Sad but true that this is the reaction they want. Just gotta let people like that win if it makes them feel better about themselves (I think).

On the topic I've come to find the middle ground after considerable thought. I think at the end of the day it's kind of along the lines of what Pipmutt was getting at, rather persistently and with no clear examples but for me anyway you're either trading a range type scenario or a trend. I think identifying which you are likely to be in will give you a better idea of how to go about your money management.

We all take different types of entries so it's hard to generalize in a way in which will satisfy everyone opinion but for me this is a better way to go about it.


Example. M.A.C.Doug showed us how he trades counter trend resistance points for one to one. Seems logical to me. Where as Pipmutt probably like to ride trends for longer periods of time and so 1:! seems like a ridiculous premise to him.

As for me I identify key points where the buyers are likely to overwhelm the sellers or vice versa. The problem I have is whether this will result in a breakout (where you can make the BIG money in one trade) or just a reversal at the next resistance point (A more common scenario but much more tailored to a 1:1 type scenario unless on larger time frames).

So... All that said knowing which situation to aim for is key in then determining which target to shoot for.

My fix? simple example... When entering off a trend line I ride the trend. When entering off horizontal S/R I play the range, sometimes a short term range will coincide with a longer term trend. So it goes back to what the current landscape is and which scenario will be most likely over 100 trades.

Kind of a no brainier conclusion I know, sometimes it's good to get back to basics.

Anyway just my closing on this thread and topic.

Good luck and good trading/ learning to all.
Time hides Nothing
  • #476
  • Jun 17, 2012 1:58am Jun 17, 2012 1:58am
Congratulations pipmutt. You have succeed in what you set out to do and that is destroy this thread and bury any potential helpful discussion deep within not only agressive argument but a never ending string of incorrectly quoted comments and outright nonsense. I urge you to improve your reading skills and ability to retain information.

Goodnight traders.[/quote]

Roofx

The thread has not been destroyed.

What has happened is that the same protagonists ( a group called the beagles) descend on a thread, perhaps a thread such as yours that might be usefull to a few traders or more to the point not so good for the brokers and then 'gently' persuade those that follow the thread to move on.

Pipmutt may, may not be in that group but certainly isn't as bad as some of them.

Several very good threads over the last couple of years have been closed down, even to the extent that one superb trader got nailed everytime he attempted to run a thread, it was one of the threads that the 'brokers' might not have been to keen on.

You have full control over who can post, it's your thread remember.

M.
  • #477
  • Edited 3:58am Jun 17, 2012 3:25am | Edited 3:58am
Quoting Roofx
Congratulations pipmutt. You have succeed in what you set out to do and that is destroy this thread and bury any potential helpful discussion deep within not only agressive argument but a never ending string of incorrectly quoted comments and outright nonsense. I urge you to improve your reading skills and ability to retain information.

Goodnight traders.

not sure why a debate between people who are in favor and against 1:1 R:R ratio should destroy a thread.

This is a forum, debates are normal and even desirable to be able to see different angles of the problem. Grow up, man.
  • #478
  • Jun 17, 2012 3:55am Jun 17, 2012 3:55am
I beg to differ here ... he banned you for not knowing when to stop stepping on his toes. You don't have to take part in every discussion and challenge everyone ... and I quite agree, you're polite, on topic and most of your posts make good sense.

Quoting pipmutt
Seeing as Roodfx the OP has banned me from his thread for disagreeing with him and highlighting his ineptitude and shortcomings
forget about tomorrow, just steal away into the night
  • #479
  • Jun 17, 2012 4:29am Jun 17, 2012 4:29am
can someone start a thread "The Power of 2/1"... please?
tradewith60
  • #480
  • Jun 17, 2012 10:42am Jun 17, 2012 10:42am
Forget the reward first, remember the stops.

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