Has someone found an Strategy that can give 1:5 risk reward ratio?
One of the best traders Paul Tudor Jones says that he does not enter a trader that would give him less than that.
I been thinking on the SMA strategy by robopips. I think that we could use 60 pips of stop loss and 300 pips of take profit and use a trail stop every 60 pips.
What are your thoughts?
I think @tommor has a system which could easily knock 1;5 in to a cocked hat 
But his system (which is not really a secret) also has a LOT of losers, Break - evens, and other trades which are profitable but not to the 5X level.
Yep, you have to pyramid your trend-following winners. The dream situation is to be able to add trades while moving the stop-losses on the older trades such that your capital risked never increases no matter how many trades are opened. BUT, trends that reach this energetic state are not found every day, plus for some traders the surrendered unrealised profit is too much to face.
I think a good idea would be to start with 1:1 and gradually start growing it, while you exercise your will power, patience and your acceptance to lose.
I think it’s hard to trade with arbitrary pip values and R:R. You would need a lot of patience to find the one that fits exactly within those parameters. @jorgemontero makes a good point about the psychology side of it.
How do you propose to tell before hand if a trade will be at least 1:5 R:R.?
This right here.
And I think Tudor is described as one of the best macro traders out there, like a 1%er. Plus he traded other markets, like commodities, and this was back in the 80’s. Things have definitely changed today compared to back then. I just think its easy to say, hey, this guy says look for 1:5 RR, worked for me, I run a hedge fun.
I think you put to much pressure on your trading to always look for that ratio.
Exactly 1:1 is a good way to start, aiming always for that 1:5, and the answers to that question is back testing my friend.
Tudor, also trade tops and bottoms instead of riding the wave.
Here is a good way to spot them.
Its a wild goose. Get in on a trade until the market/trend turns and get out, whatever the R:R ends up to be. A fixed ratio is too arbitrary…2 people can place the same trade with slightly different SLs …so their TP would be different on 1:5.
Back testing isn’t going to help much, You’ll probably have a high rate of losing trades that were actually profitable but didn’t achieve a 1:5 before reversing direction.
Sheesh 1:5 is not my ideal setting in my short term trading lifestyle.
I think if I was using that I’d have way more LOSING trades than WINNING.
I do think this could work on a longer time table though.
I’m not sure if I’d have way more LOSING trades, but I’d have WAY LESS trades, period.
No I’d have more losing trades with my CURRENT STRATEGY as I didn’t set it up for long hauls of holding out for profit if that makes more sense. I’m the get in, hold a position a few hours or so, and get out kind of trader. I still like this 1:5 & I’ll try to demo it on my long-term strategies.
A 1 to 5 ratio is pretty large and not something you will see very often. Most traders looking for something like this end up failing because they do not have the patience or experience and know how to capitalize on these type of trades alone. Your best bet to be successful is to find something that is 1.5-2:1 reward. At the beginning it doesn’t seem like a whole lot, but as you trade you will realize more frequent winning trades and after compounding your balance will increase much quicker than looking for something with a huge win ratio, but realizing many losses chasing those trades. As well, if you are moving your stop loss as you go, this will increase your risk reward ratio without changing your strategy. Good luck.
If you don’t set a stop loss you can have a 1:5 risk/reward - if you manage with perfect attendance.
Not using stop loss can be the biggest error one can make.
Only if one uses too much leverage and doesn’t hedge and diversify adequately.
You would be amazing at how little a specific Risk:Reward setup has to do with being profitable.
But to answer your question, there are occasionally setups using candlestick analysis that can become 1:5’s. Often times you won’t reach full profit and walk away with a 1:1 to 1:3.
I would say focus less on R:R and more on simply learning how to trade in a way that will cause you to have a long term positive P&L.
It sounds mechanical so backtest it. That should tell you real quick if it has any long term viability.
We recommend that you have at least have $100,000 of trading capital before opening a standard account, $10,000 for a mini account, or $1,000 for a micro account.
Of course, open an account only when you are consistently good.
So if you only have $60,000, open a mini account. If you only have $8,000, open a micro account.
If you only have $250, open a demo account and stick with it until you come up with the additional $750, then open a micro account. If you have $1, find a job. I read this while I was studying, this want to mean that I can’t open a live account of 50$?
this is great advice,
So long as the broker allows it, you can. Some brokers allow live accounts as low as $10. I always advocate proving yourself consistently profitable in demo before going live, however, regardless of the amount that you start with.
My thought on RR is similar. I’m trying to improve my entries closer to supply or demand so my negative swing is minimal and trades move more quickly in the profitability.
As I think about it I really don’t think about RR.
KC