Hey everyone 
As a newbie I wonder what is the normal balance of pips to set for Take Profit and Stop Loss please?
Would it be 50/50 each way? eg. - 10 pips SL / + 10 pips TP
Thank you kindly for your help!
Typically, you want to find trading setups that give you more than your SL.
2:1 or even 3:1+
If you trade these kind of setups, you could have a win rate of less than 50% and still come out profitable. Imagine taking 2, 3 or more footsteps, and then taking one back. In the end, you still come out ahead.
This is known as R-Multiples; basically, if you have a trade that gives you a 2:1 ratio, you are basically earning twice the amount you are risking. So if you plan on risking 1% on that particular trade, you have the potential of making 2%.
Hope that helps,
Clark
awesome thank you kindly ClarkFX for your help
I am putting together a trade plan now to test a 3:1
making progress thanks!
I instinctively agree with ClarkFX, but this question does depend on the R:R of your strategy. I know of traders who win under 50% of their trades, but when they pay out they are looking to make ten times their Stop or more. Other guys have an 80% (or better) win rate, they only need 1:1 to come out ahead and make good money.
Personally, I will look at any setup that gives me a R:R of a minimum 1:1 (which my strategy would make pay out), although I much prefer to be looking at 1:2 or better. I prefer a higher percentage win rate, and am happy to sacrifice some R:R to get it. But a worse win rate and a better R:R can be just as profitable, as long as the strategy and execution suit it. It takes most traders some time to establish where they are on this issue, in my experience. There is no definitive right answer, I just wanted to make the point that the two aspects go hand in hand - risk appetite is one of the most important elements when considering one’s own trading style.
ST
thanks for your helpful comments Simon