Thanks everyone.
I have learnt from this thread that MM of 1:2+ is not engraved in stone as we were led to believe. (I did depart from this rule in the past with success but was very nervous about it)
So how about another golden rule ’ Never trade against the direction of the daily trend.
Whats your take on that?
I take an example to show that this rule may also be borken sometimes-
Last week I made 200+ pips (half of my monthly quota) going against the daily trend on EU. The daily is down from last few months. I usually trade for 20-40 pips in the direction of the daily,H4 and H1 trends (dont much use the lower frames)-but when you see that the price is too low (or vice versa), the market will try to adjust or correct and of course the fibo retracements help too.
So when EU is trading at 1.26 and the trend is down on the daily, there is no reason why you cannot go long for a decent amount of pips.
Caution Here: I longed because the price was at a certain point, at a certain time, in other words the co-ordinates were perfect for me. Had it been some other price at some other time, I will prolly not gone long.
Hope it helps.
tex
well said, the only appendage being that profit is relative to your lifestyle. I.e. If I am a part time trader a small monetary gain is a profit. If I want to go pro and full time, a small amount may be small. Hence the constant need to evolve , adapt,whatever to keep the gains increasing.
Tex
Well I don’t actually see any problem regardless of the account size as long as you keep your risk per trade at one or two percent. BUT I say so now. Once my account gets bigger I’ll have to put myself together, control my emotions and look not at the quantities but at the percentages!
Well trade!
Hi Hendrix!!! I thought so too, but I realized (personal opinion) that it’s even more foolish to try to keep a 1:2 rrr. That way your take profit should be way too far to be reliable I think. Maybe this rule applies for long term traders I think, but not for us (or me) daytraders.
Have a great pipping:D!
I am a daytrader, and I trade fades on the 5 and 1 minute charts. I’m happy with 30 pips a day so I’ve broken that down into 4 small wins of 7.5 pips each. Is anyone fraustrated with having to make 2 winning trades to make up for 1 loosing trade ?
I still think 2:1 might work for me. FXCM doesn’t allow TSL’s to move any smaller than 10 pips at a time, and I need pip by pip or atleast 5 pips at a time. I can do this manually but automatic is much better and removes any hesitation, also if I ‘set and forget’ I can’t be there to manually trail the stop
This would remove some of my fraustration
I’m interested to know what time frames people are using this 2:1 ratio
I trade the 30, 35, 40, 45, 50, 55, and 60 minutes charts. And I’m not frustrated with that rrr, since I think another important point is the number of times you win compared to the ones you lose.
Regards.!!!
Risk/reward ratios must not be taken in isolation.
They are closely correlated to win/loss ratios.
For you to win at forex, the following equation must hold true…
[B]risk/reward x loss/win >1[/B]
If the above =1, then you are breaking even.
If <1, you will lose at forex trading.
Just to clarify, the equation would look like this then:
[B](reward x percent winning trades)/(risk x percent losing trades)
[/B]An example: 80% winning trades (20% losing trades then) with risk to reward: 2:1
Follows: (80 x 1)/(20 x 2) = [B]2[/B] -> a working system