Mei Awesome thread, thank you sharing your findings. I am a relatively new trader and not a very consistent one at that. I have tried many systems and have not found a good fit for me yet but I am still searching. I hear from many sources that consistently applying your system is the key to realizing the advantage with that said wouldn’t the best trader be an EA that will always follow the rules? I have tried a few with terrible results just curious what you think. Your thread has already helped me and I will continue to follow.
Great input. . .i’ve learn new thing here n it has confirm n contribute to my trading plan.
Please do contribute n do not stop. Not many will put such a write out.
Those graphs at the start of your thread just made it so obvious and clear. To see the statistics on R:R and where a S/L is placed and its effect on a trades outcome has been a real eye opener. Its one thing to read about these things but to see results just makes it better.
I’m a newbie to FOREX and its people like you who give good advice and knowledge freely, in order that others may benefit make the learning easier. THANK-YOU.
Kiwiman:)
I just noticed the somewhat rhetorical question posed by the OP, “If I can make a random entry system profitable, why can’t you be” or to that effect. I will answer this question in literal terms.
The average trader is not participating in a game with “random number” variants. They are actually participating in an extremely competitive psychological type game. The opposition they face is literally engaged in deceiving the average trader, so that the entries they believe will be winners, actually have a very significant probability of losing. How can this be? How can the average trader actively and consistently take trades that have a high probability of losing? Simple: Fear and Greed. Those who use Fear&Greed as tools of deception are actually taking money from those who are under their influence.
So if you want to be profitable, move past this naive belief that this is a randomized game where statistics give an edge, and see the truth… that by recognizing Fear & Greed on the price grid, you can very consistently determine the weak players in the market, and proceed to take the winning side of the trade with stunning accuracy (ie. tight Stop Loss).
If you’re looking to earn a single-digit annual return on your retirement fund, go ahead and trade with a 100-150 pip stop. But if you are looking to be a competitive trader earning significant double-digit returns PER MONTH, then get with the program and investigate how you can start using 15-30 pip Stop Losses consistently.
… and if you have an even tighter SL you can make triple-digit returns per week :30:
you just have to be like a “sniper” 
ArtVandalay probably come back from a seminar for the Goldman’s quant desk. There is absolutely not correlation between returns and stop levels. I’ am curious to see his ‘stunning accuracy’.
The 15-30 pip SL was my newbie-friendly suggestion. I actually use 8-20 pip stops in my own trading.
Actually, no, but double-digit returns per week does happen. About once per month (averaged out)
Overall average is pretty much contained in the 4-8% range (per week)
sure, Sniper, Surgeon, Engineer, they all require expert accuracy, choose whatever analogy you like! Or you can use my favourite one…
you just have to be like “me”
Averaging 4-8% range (per week) is 200%-400% return a year (no even talking about compounding). If, as you are saying, you are using a 8-20 pips S/L this means that either you have an impressive R multiple on most your positions or you over-leverage all your positions. Even if it was true (which I doubt), it could not be sustained in the long run and your equity curve would be a mess. Any experienced trader would know that your numbers do not add up. And don’t worry I won’t ask you to show any track record because I already know your answer.
Quanti
It’s alright, sometimes fathers look like “super-heros” in the eyes of their children. I would agree that the R-multiples are impressive, but I don’t feel that I am “over-leveraging” my positions. Since my risk is very well controlled, and certainly within a reasonable limit, there has really not been a problem sustaining this level of performance in the long run.
The numbers add up to me and I’m an experienced trader. If they don’t add up for you… perhaps you aren’t the “experienced trader” you thought you were
OK guys, I have let this go. But its starting to get a little personal and hateful in here. So I am requesting this to stop. Look I am not going to get in the middle of this but I just dont think its acceptable behavior.
We all know forex is full of liars, and it is a good idea take everything with caution, but I think your argumentation is just ridiculous.
What do you mean by “over-leverage”? If maximum one position open at the time, 8-20 pip sl as he says I don’t see a problem. Sure thing some leverage is needed, but 1:50 or even 1:10 leverage could be enough. I haven’t done math now, but I had done it in the past with even smaller stop loss and I think his scenario is definitely achieavable.
I don’t know what you understand with “impressive R multiple”, but if you have like 1:5 R:R (I would say nothing impressive), risk 0.2% percent of your account, take 3 trades a day and win one them you have 3% return on week. I described what I think is realistic, achievable result. Take higher R:R or % of account and you will get higher return per week. Not saying that it is easy or that everyone can do that.
Every "experienced trader’’ knows nothing can be sustained in long run, you will meet liquidity (leverage probably faster) issues in all markets.
Then you say statement which I don’t get (about equity curve being a mess). From my understanding equity curve meeting leverage, liquidity issues would turn into something like square root function >1, still increasing, but losing temp. But why mess, where is you logics?
I post this because I think although he might not be nearly as good as he says, I don’t see why you shouldn’t give him some benefit of doubt. Well, at least if you go on and make offense then make sure that you at least have some good arguments.
This is your thread, if you feel the need you can ask mods to clean up the thread so that it stays on track.
MeiHau,
Thank you for this thread. It has been very helpful to me. Could you give us any sense of how these principles (low risk / high reward and effective stop placement) work with time frames other than the daily time frame? What I was specifically thinking about was the average daily range variable. If we were dealing with a different time frame, would we define that number across the time frame in question? So some people trade on 4 hr or 1 hr time frames. What effect would that have on these ideas if the average daily range was outside of some smaller noise levels associated with a smaller time frame? My gut feel is that the trader would need to lower his risk / reward pip numbers but maybe keep the ratio the same while still trying to stay away from the noise. Would that be correct?
Thanks, and I hope the question makes sense.
A win ratio of 33% for a 5:1 RR is, to me, impossible to sustain. I’am in the market every single day and I know how hard it is to pull out positive return consistently. 5:1 is enormous. You may have it from time to time I agree but you will need to incur large drawdown and large losing streaks.
It would be interesting to know the thought of MeiHua has he has done research on high risk/reward ratio approach. Is-it statistically possible in the long run to maintain a 33% win ratio for a 5:1RR and if yes, what would be the optimized size position to avoid ruin? At least we will be able to do the math to compare the finding with the 200%-400% yearly return claim.
Also the probability of ruin is 100% for a 5:1 RR strategy using a 1% risk per trade for any win ratio equal or lower to 15%.
Quanti
If you really want to it to stop, the only way is to put those misbehaving on your “ignore list”…period. 
good god, 33%?? 15%???
Try 80-90% win rate. That’s where I like to live. It requires patience, and impeccable timing, but with the right training, pretty much anyone could do it.
My Expectancy averages out to about 1.75R (and my Average Risk is very slightly below 2%, 2% being the most common (mode) risk value for my trading.
I average 3-5 trades per week.
Sorry I don’t have specific values because I’m experienced enough to know that it doesn’t really matter. I’m “wildly” profitable by most people’s standards and there’s really nothing to analyze (unless you’re an outsider who naively doubts my claims).
But do the math on the stats I DID provide and you’ll see the performance I “claim” to make is indeed achievable over the long run.
I have nothing to sell, I have don’t give advises but I joined this forum by posting my live results first. I understand that many people like to claim extraordinary results but no one is showing anything. I won’t debate on 80-90% win rate ratio as it seems to be a lot of super traders in here but I can tell you in order to reach a 90% win rate on a CONSISTENT basis, you must have an inverted RR. Good god if you could make 33% with 5:1 return, you will be rich quickly.
Simply not true. Why do you even believe this?
I guess I preclude the need to “get rich quickly” having attained a state of significant wealth in years past.
The market is mostly random. In order to have an edge give you 80%-90% of winning trades, you will need to have cracked the code for randomness.
Again and again, if it is not true show me that it is. It seems impossible to me on a CONSISTENT basis but I’am ready to revise my thought if you can show an account with this win ratio and a positive R multiple (even 1.05:1)