Frankly speaking traders have to calculate the ratio in compliance with current market situation. So, if I see that the market is highly volatile, then probably my ratio in this particular day will be 1:0,5 or even less, because risk management is a very difficult thing. If I see that everything is okay on the market and moreover after a proper technical analysis I found a good entry point, I can open a position with 1:5, where 5 is the percentage of the reward. For example, if the position opened with 15$, then I plan to make up to 60-75$ and this is a huge risk, because I still have only 15$ for losing this position.
Well, I believe that it’s kinda good risk management strategy. However, it also has its own drawbacks, for example, low payback. I mean you will certainly earn less money if you will try to comply with this strategy. You will lose 10$ and then you will earn it back. In this case you might face stagnancy in your development as a trader.
I prefer 1:3 risk reward ratio and this thing seems to me the most profitablke for the most part of traders, however you have to analyze a lot in order to understand when the price might break the levels for example of support and resistance in order to let you earn money according to this strategy.
if you aim for 2:1 , you only have to be right 34% to stay in the game.
The longer you are in the game the more likely you are to make money. 1:1 just seems too much of a quick way to ruin
Learn to scale, use multiple take profit areas, adjust your stoploss to breakeven once TP1 is hit and add to your position once TP1 is achieved.
Scaling your confirmed winners is one thing that separates smart money from retailers