Thread: Risk/reward
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Old 07-09-2008, 04:05 PM
mojo6911 mojo6911 is offline
 

Join Date: Jul 2008
Posts: 3
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I just started here, but it seems pretty basic to me. If you are making good trade, you still have it backwards. You are limiting yourself to only make 10 pips, but stand to lose 2.5x that. You want to maximize the gains when you get them (good trades) and minimize the risk when you screw up.


Lets say you are a good free throw shooter in basketball. I will pay you $10 for every one you make and you will pay me $25 for every one you miss. Even if you build up your bankroll to $100 by making 10 in a row, you could easily lose it all with 4 missed shots. You may be able to win in the short term, but long term, you can't sustain a win rate that high.
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