blackChelsea posted: I keep my risk reward ratio to 1:5. There is no harm for getting 1000 when keeping 200 on risk.
Thats the ideal i think between 1:3-1:5 but you have to have the mentality to deal with the losses as the is around a 55%-60% accuracy id say. What is yours like?
With a risk reward of 1:3 and a win rate of 55% you would be a excellent trader actually, and is very hard to reach. You can be very profitable with a RR of 1:1.5 and a win rate of 50% I think a lot of people have a completly wrong idea of what being profitable is. It is about being consistant in the long run. A high RR combined with a high win rate is almost impossible. And anybody who is promising these crazy high win rates with crazy high RR is probably bullshitting.
Yeah completely agree. A sure fire way to know a fake guru is high accuracy and RR. 55% isnt sexy but will make you profitable
In order to manage the risks and save the trading capital, risk/reward ratio is vital to use. The optimal RR ratio differs widely among different strategies but a ratio of 1:3 is generally considered good for all the traders.
No trade is ever a certainty. You need to have a good RR ratio to ensure that you minimise your risk. I only risk 1-2% of my account in any one trade. I like to keep my ratio at 1:3. Without that risk management it is too easy to blow your account or make much higher losses.
The expectation that a trader will get $ 3 by investing $ 1 is called investment. One of the advantages of using it is that the stock market or the forex market cannot be traded with a 100% profit guarantee, so the risk ratio is used to keep the loss percentage low. Like I use 1: 2 or 1: 3 ratio.