well, if you keep your risk/ reward at a constant absolute value e.g. 100$, you will “theoretically” get even … of cause you wont gain as much in that case if you are able to shift your winning percentage above 50%
That’s why you should [B]not[/B] overtrade.
That’s why you should [B]not[/B] trade because trading is fun.
That’s why you should [B]not[/B] approach trading as a gamble.
That’s why you should [B]not[/B] take trades based on gut feeling.
That’s why you should [B]not [/B] trade if your mentally stressed.
depends on how many wins vs losses you have or a defined period. Bottom line you certainly will not make money and chances are you will slightly erode your account if you have a 50:50 win/loss ratio.
It is not difficult to find a system that has a risk/reward > 1.
We do this by setting a target profit greater than the stop loss.
The win/loss ratio is more difficult to control.
However, the spread is an edge against us immediately, especially if you are scalping for only a few pips.
In such a case the spread (which must be earned first) becomes a huge percentage of the total profit.
This is why we must let our trades run if they are in profit and cut our trades off promptly if they are in loss.
It also gives advantage to longer term trades.
[B]A lot is touted on this forum about psychology of trading and the need to get your emotions under complete control.[/B]
I do not really believe this.
I believe there is too much hype in all this.
It is not really possible to change your personality.
My answer is different - I simply believe that you should not trade when you are feeling down.
A spirit of depression will otherwise invade your trading and your sub-consious will war against you thus generating a loss.
There is nothing wrong about getting excited about a winning trade as long as [U]you remember to pay attention[/U], so that you do not forget to exit at the right time.
I can say honestly that risk reward is not the solution.
Here is an example. The risk for a lottery is $1. The reward
is big. Yet, most people will go broke trying to win the lottery.
Therefore, the solution or the holy grail is to win as much
as you can. Heck, if you are winning most of the time why
bother with risk reward???