1:1 Risk Reward Ratio | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Rationale behind "Risk Per Trade" and "Risk/Reward Ratio"? 8 replies

Regarding risk/reward ratio 10 replies

Is a high risk reward ratio overrated? 12 replies

Good reward/risk ratio experiment 20 replies

Risk Reward Ratio and Account Risk 30 replies

Attachments: 1:1 Risk Reward Ratio
Exit Attachments

1:1 Risk Reward Ratio

  • #1
  • First Post: Mar 23, 2016 6:11am Mar 23, 2016 6:11am
I'm interested if anyone is trading with a 1:1 risk reward ratio.

I subscribe to the 3:1 theory but of course I struggle to keep my hit rate above 40%

Even though my account is up nicely this year it doesn't feel great trading with a low hit rate .
  • #2
  • Mar 23, 2016 6:23am Mar 23, 2016 6:23am
Quoting price777999
Even though my account is up nicely this year it doesn't feel great trading with a low hit rate .
The win rate isn't important. As long as you are trading constantly in profit ... that means the combination winrate/RR is doing the job.
MT4/MT5 EAs/Indicators/Alerts coder
  • #3
  • Mar 23, 2016 6:46am Mar 23, 2016 6:46am
I'm thinking about taking half of at 2:1 ....

In this example You had to wait two days for your target , you could have been out at 2:1 and back in the next day .... easy to say in hindsight of course.
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.JPG Size: 184 KB
  • #4
  • Mar 23, 2016 7:10am Mar 23, 2016 7:10am
As traders we are used to changing the rules to fit current market conditions. Let it be RR, tp. sl whatever. You need to ask yourself does it help you with your trading method or it's an excuse to get temporary better results.
Usually it's never bad to trade with 1:1+ as long as your system will follow with hit rate.
  • #5
  • Mar 23, 2016 7:34am Mar 23, 2016 7:34am
Quoting margoo28
As traders we are used to changing the rules to fit current market conditions. Let it be RR, tp. sl whatever. You need to ask yourself does it help you with your trading method or it's an excuse to get temporary better results. Usually it's never bad to trade with 1:1+ as long as your system will follow with hit rate.
This is true ,I was thinking about 6:1 a few weeks back ....
  • #6
  • Mar 23, 2016 8:16am Mar 23, 2016 8:16am
I have found that 2:1 or more really is more profitable. with 1:1 you really need to be disciplined and have something that works more than it don't,
or else it will just be brake even trades for you
Bulls are stupid Animals!especially when Im short!
  • #7
  • Mar 23, 2016 8:30am Mar 23, 2016 8:30am
Keep on your current trading style and try testing 1:1 R:R on the side so that you won't lose anything. I myself prefer 1:2 Risk:Reward, 50% win rate is achievable with 1:2 R:R and it's more sustainable mentally compared to always go for 1:3 R:R and above.
  • #8
  • Mar 23, 2016 8:35am Mar 23, 2016 8:35am
Quoting price777999
{quote} This is true ,I was thinking about 6:1 a few weeks back ....
Been there, done that

Anyway I'm more 1:2+ 'fan' rather than 1:1. It usually gives me more space, and trading is more comfortable. You need to remember also,that trading with 1:1 is more spread/slippage dependant. When you trade for example for 10pips with 1:1, when you count spread only, you need to get 12pips and risk only 8pips, and that gives you rather 1:1,5 than 1:1 from the start.
  • #9
  • Mar 23, 2016 8:48am Mar 23, 2016 8:48am
Quoting Alpha8
Keep on your current trading style and try testing 1:1 R:R on the side so that you won't lose anything. I myself prefer 1:2 Risk:Reward, 50% win rate is achievable with 1:2 R:R and it's more sustainable mentally compared to always go for 1:3 R:R and above.
Yea I'm thinking 50% hit rate would be much more mentally comfortable , then when the markets are more volatile 3:1 targets .
  • #10
  • Mar 23, 2016 8:53am Mar 23, 2016 8:53am
I always aim for ∞:1 but thats just me.
  • #11
  • Mar 23, 2016 9:39am Mar 23, 2016 9:39am
then there are days like today when targets seam an impossibility
  • #12
  • Mar 23, 2016 10:48am Mar 23, 2016 10:48am
Quoting price777999
I'm interested if anyone is trading with a 1:1 risk reward ratio. I subscribe to the 3:1 theory but of course I struggle to keep my hit rate above 40% Even though my account is up nicely this year it doesn't feel great trading with a low hit rate .
To trade 1:1 risk:reward, you need to catch the momentum . That mean after your order it activate, there must be more chances for the price to continue in the direction of the breakout than to reverse. Usually, this will not require to adjust your SL for a reduced risk because the momentum is too strong and price will not turn back too much after triggering your entry.

To trade 1:1 risk:Reward you need a high win rate. With good risk management * adjusting your SL below/above fresh demand/supply zone* you can obtain a 1:2 risk reward when in fact your TP remain unchanged , only your SL is adjusted toward your entry until you achieve 0% risk (SL at breakeven) .

Scalping this way isn't an easy job , it require knowledge to catch the momentum . Try to learn about explosive breakout patterns (ascending /descending/rising/falling wedge) and look for them at keys zone support/resistance only after a trend was identified corectly
Money moves the market, not an indicator.
  • #13
  • Mar 23, 2016 2:09pm Mar 23, 2016 2:09pm
I will typically use 2:1 on short term trades and 3:1 or 4:1 on long term trades with a trailing stop sometimes. I've also in the past used a successive increase of leverage and/or r/r ratio after losses to help re-coup them.
  • #14
  • Mar 23, 2016 3:26pm Mar 23, 2016 3:26pm
This is something I have thought about many a time. Assuming all things equal, I have often wondered if the probability of a win is inversely exponential to the increase in the R:R. So, if it is not a linear comparison, it must also impact on the profitability. Can anyone come up with a mathematical explanation between probability, R:R and profitability?
  • #15
  • May 20, 2017 4:47am May 20, 2017 4:47am
Start with a 1:1 Risk/Reward-Ratio and trail the stop-loss level as the market moves in the intended direction ...
Market is not random but unpredictable
  • #16
  • May 20, 2017 7:20am May 20, 2017 7:20am
Quoting FerruFx
{quote} The win rate isn't important. As long as you are trading constantly in profit ... that means the combination winrate/RR is doing the job.
Completely disagree! This is very important, the higher the less likely you are to splurge. For example, 1 to 3, you need 30+% to be a winner, but you can have a huge series of losing trades and you will get a drawdown, so it can be forced to reduce trading volume is a direct path to 0 . So you need to understand that the more you lose, the more you have to go back, and it will be harder and harder, taking into account the drawdown and psychological. In fact, the bigger the bet wines psychologically easier to trade and less drawdown! But this is all theory!
Don't start a game in which do not know the rules
  • #17
  • May 20, 2017 8:03am May 20, 2017 8:03am
Quoting Mpak
{quote} Completely disagree! This is very important, the higher the less likely you are to splurge. For example, 1 to 3, you need 30+% to be a winner, but you can have a huge series of losing trades and you will get a drawdown, so it can be forced to reduce trading volume is a direct path to 0 . So you need to understand that the more you lose, the more you have to go back, and it will be harder and harder, taking into account the drawdown and psychological. In fact, the bigger the bet wines psychologically easier to trade and less drawdown! But...
You didn't get my point. The main idea is that the winrate alone means nothing in defining if a stretegy is profitable. It must be combined with RR.

To illustrate my point:

- You can have a 99% winrate and be a loser ...
- You can have a 1% winrate and be a winner ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #18
  • May 20, 2017 8:10am May 20, 2017 8:10am
Quoting FerruFx
{quote} You didn't get my point. The main idea is that the winrate alone means nothing in defining if a stretegy is profitable. It must be combined with RR. To illustrate my point: - You can have a 99% winrate and be a loser ... - You can have a 1% winrate and be a winner ...
Sorry. Maybe my English is still bad... Now I understand.
Don't start a game in which do not know the rules
  • #19
  • May 21, 2017 5:21am May 21, 2017 5:21am
Quoting FerruFx
{quote} You didn't get my point. The main idea is that the winrate alone means nothing in defining if a stretegy is profitable. It must be combined with RR. To illustrate my point: - You can have a 99% winrate and be a loser ... - You can have a 1% winrate and be a winner ...


You win 99% of the time but your 1% loss eats up all your profit. That makes you a loser. You lose 99% of the time but they are minimal because you cut losses quickly. You only win 1% of the time but let your profits run and make up for all the losses and more. That makes you a winner.

Profit = Wins - Losses. That's how it always goes in trading. The winrate or losing rate does not define profitability or success in trading. What is left after losses have been deducted does.

My 2 cents.
Patience and Discipline, these are the Holy Grail.
  • #20
  • May 21, 2017 5:25am May 21, 2017 5:25am
Quoting marcnathan88
{quote} You win 99% of the time but your 1% loss eats up all your profit. That makes you a loser. You lose 99% of the time but they are minimal because you cut losses quickly. You only win 1% of the time but let your profits run and make up for all the losses and more. That makes you a winner. Profit = Wins - Losses. That's how it always goes in trading. The winrate or losing rate does not define profitability or success in trading. What is left after losses have been deducted does. My 2 cents.
well said happened to me years and years ago heaps of small profits one big loss , to day I have bigger profits and a few small losses
people leave, but this thread will go on for ever
0 traders viewing now