What's your expected return per trade?

[KingKaivar]

I'm rather curious. I've been backtesting my own strategy back to 1990 and my expected return is around 10% per trade. Would this be pretty good, okay or crap?

[elegy400]

Depends what you mean

If 10% per trade means 10% of your account balance and you're only risking 2%, that's a 5x payoff which is huge. Given you might expect to lose - say - half your trades, this means your TP/SL is 6/1. That's a great strategy and you should write a book on it! Royalties of $1 a copy and you will sell millions....

If however 10% a trade means you risk 2% but gain 2.2% in case of a win, that's entirely doable. I'm assuming you would then have a high win-rate as a result, so the economics would be pretty appealing.

Can you give more details on the structure and strategy?

[KingKaivar]

Sorry. When I mean expected return per trade, I'm referring to the amount you risk. So say if you risk $100 and you expect a 10% return per trade, you should receive $110. Or if you risk 2% of your account, you expect to gain 2.2% from your trade.

An example: your strategy uses a 1:1 r:r ratio with a win% of 55%, so your expected return per trade would be 10%.

[SimonTemplar]

I don't think that the way the poll options are laid out you are going to get a reliable answer to the question you are asking, sorry. I just read the options, and read the explanation you outlined in your last post, and came to a completely different conclusion each time. Not knocking, trying to be helpful. I'd edit the poll to be clearer, if you can. I risk 1% per trade, almost all of the time my return per trade is 1-5% of my total account balance. Not sure which poll option that makes me!

[PaladinFX]

I risk 1% per trade, almost all of the time my return per trade is 1-5% of my total account balance. Not sure which poll option that makes me!

I guess that'll put you in the '40% and above' category, judging from KingKaivar's post #3 (in which he specifies that he means Return on Risk), since your return on money risked is 100-500%.

__________________________________________________

In reply of the topic of this thread: My profit margin greatly varies from trade to trade, since I calculate S/L and T/P according to price movement preceding my trade.
If I'd have to estimate, I'd say I'm averaging about 80-100% Return on Risk ... I'm mainly trying to trade with a Risk:Reward ratio of 1:2 (which equals 100%) while also having trades of 1:1 and, occasionally, 1:5 or higher.

It's a hard question to answer.


Cheers,
O.

[SimonTemplar]

I guess that'll put you in the '40% and above' category, judging from KingKaivar's post #3 (in which he specifies that he means Return on Risk), since your return on money risked is 100-500%.

__________________________________________________

In reply of the topic of this thread: My profit margin greatly varies from trade to trade, since I calculate S/L and T/P according to price movement preceding my trade.
If I'd have to estimate, I'd say I'm averaging about 80-100% Return on Risk ... I'm mainly trying to trade with a Risk:Reward ratio of 1:2 (which equals 100%) while also having trades of 1:1 and, occasionally, 1:5 or higher.

It's a hard question to answer.


Cheers,
O.

But then why is there an option for 'under 2%', which two people have ticked?! Does that mean that they would risk £100 per trade and then make only £2 back? Or am I missing something? That seems... unlikely. But then why would that option exist at all in the poll if that is what it means? I think I'll go get some lunch - losing my grip on all this complicated trading stuff lol.

ST

[KingKaivar]

Yeah, sorry, maybe I should've put "expected return on risk" which would probably make it easier to understand.

[Tansen]

Haha I was expecting someone to put a troll vote just to botch the numbers.

When I saw the over 40% I had to laugh I thought this person must be risking a large quantity of their account or they are playing pairs only at their extremes.

[jingoy]

wow over 40% I guess Its safe to say that it varies, I don't focus on it too much!

[PaladinFX]

But then why is there an option for 'under 2%', which two people have ticked?! Does that mean that they would risk £100 per trade and then make only £2 back? Or am I missing something? That seems... unlikely. ST

lol, yeah, I guess it doesn't happen to often ... but it does happen:
A few minutes ago I've closed a trade at something like 2-3% Return on Risk; it's been sucky since I'd opened it yesterday afternoon, always in the red ... so I've lost my trust in it and just manually closed it as soon as it was green with a few bucks.


O.