Hey there!
I Need your help because i’m depressed with it.
see, many trades i’ve open are high profitable but only with a big stop loss
to be exactly 10 pip TP and 30 pip SL!
but when it comes to a loss trade i lose much all earned profit from the wons.
please give me a light!
Honestly?
Find another strategy and or see if your system is more profitable when traded opposite.
Everybody can trade with a big SL, but it is not wise. You have to look for another strategy where the TP/SL porpotions are more in your favor. See what you can learn from the losing trades, would they give a better entry point? Why not trade less and only enter when such an entry point occurs. Do you understand what i mean?
Don’t feel depressed, just be rational and ask yourself if a good trader would trade the way you do. Considering that you posted this you already have the anwser.
30 pips is not hardly a big stop loss. learn to trade off the daily charts, you always want your wining trades to give you at least twice as many pips as your losers
To some of us, it’s enormous.
So you’d rather trade with a reward-to-risk of 2:1 and a win-rate of 20% than with a reward-to-risk of 1.5:1 and a win-rate of 50%?!
[B][U]Think[/U][/B] about what you’re saying Dennis, when you offer people advice. There are people who have been making their full-time livings tradings forex for many years who never have a reward-to-risk ratio of anything like 2:1.
Neither win-rate not reward-to-risk ratios [U]alone[/U] are necessarily important: what matters is [I]net expectancy[/I].
[QUOTE=lexys;755261]To some of us, it’s enormous.
Hi lexys, I was just sharing my own experiences. I have tried trading short term ( scalping) with tight stops, it was very frustrating and had me ready to give up on Forex all together. It’s when I started focusing on the daily charts and taking trades that would last weeks, sometime months that I started making consistent profits. I am not offering advise on how one should trade but merely pointing out there are other approaches
What part of “You always want your wining trades to give you at least twice as many pips as your losers” isn’t offering advice? :31:
Dennis, there are many people successfully trading for a living (some of them in hedge funds and other financial trading istitutions) who don’t have a target twice the size of their stop-loss. Sorry, but what you’re saying [B][U]is[/U][/B] advice, and it’s misguided advice.
Smaller reward-to-risk ratios can sometimes be very successfully offset by high win-rates. What matters is the combination of the two, which is called expectancy.
On the contrary: that’s exactly what [B][U]I’m[/U][/B] doing, here, as a response to your blanket and erroneous advice.
[QUOTE=“lexys;755418”] .[/QUOTE] I cant understand , so what you advice on risk to reward ratio lexus
I guess i have a same thinking as you do about risk reward ratio
Trader A:
100,000 EURUSD position
30P stop loss
Stop triggered = $300 loss
Trader B:
1,000 EURUSD position
30P stop loss
Stop triggered = $3.00 loss
Pips are irrelevant. Leverage and position size is what matters.
As far as “learning to trade off daily charts”- you need to trade trade trade and trade more before you figure out what type of trader you are (plainly put). To focus on a single timeframe (such as the Daily) is an amateur approach to interacting with the markets. You need to be able to analyze an instrument across multiple timeframes to truly understand what is happening.
Simple solution - invert your signals. If your system gives you a sell signal with 10 pips TP and 30 pips SL and you always lose, instead of opening this position invert it - make it a buy with 10 pips SL (or 15 due to slippage/spread) and 25 pips TP (same reasons).
Clearly we have very different approaches to trading but this is a great subject matter that deserves further exploration, how about I start a new topic " What is Best reward to risk ratio" would love to hear more of your perspective on the subject. Watch for my post
Very simple answer- the higher the better. Anything less than 1:1 and you’ll need to be highly accurate to survive.
Clearly: my view is that a reward-to-risk ratio [I][U]in itself[/U][/I] doesn’t predicate toward profitability, and that telling people their R:R should always be 2+ makes no more, or no little, sense than telling them that it should always be less than 2.
Neither is sensible or reasonable.
Both are missing the point.
It’s a question without a right answer.
What you’re asking is like someone in retail asking whether it’s better to sell cheap or expensive items [B][U]without discussing how many of each he can sell and what the profit margins are[/U][/B].
R:R ratios [I]in themselves[/I], i.e. without also discussing the strike-rate, don’t tend either towards or away from profitability.
Here’s my contention: advising beginners that they need a R:R ratio of 2+ is really bad advice, because in practice, the one thing beginners need is a high win-rate. Without a high win-rate, they’re going to get into trouble over losing runs and losing patches, and can get into trouble even with a genuinely profitable system that has a genuine edge. They don’t have the mathematical/statistical skills and experience that you and I have, to work out appropriate position-sizing. If you had to make a choice (which you don’t) it’s probably better to advise them to aim towards [I]higher[/I] win-rates and [I]lower[/I] R:R’s, just because they’re likely at least to be able to learn more and get some experience that way, without getting into trouble.
By the way, I no longer trade spot forex (which is among the many reasons I rarely post here, now) and have switched entirely to futures (finally - they’re far better and easier, for me!), but for four years I made what anyone here would call a full-time living trading spot forex [I][U]without[/U][/I] having a R:R as high as what you’re advising as a “necessity”. So you can perhaps understand my pointing out that what you were saying was just plain wrong?
Please don’t imagine that I was complaining about your advice because I was trying to suggest the opposite. That isn’t the point at all. Saying, as you did, “You [U]always[/U] want …” about [I]either[/I] approach is misguided and incorrect. R:R ratios aren’t what matter. [B][U]Expectancy[/U][/B] is what matters. That’s all. And that’s the fundamental, key concept that aspiring traders need to understand, on the subject.
Excellent points, Lexys!! Yoo should be an FX-Women honorary member!
In the end, no fixed R:R ratio can work for everyone…also, day traders will operate much more strictly with their stops, whereas position (‘buy/sell and hold’) traders will have either no stops or hedge their positions with, say, options; also, day traders may leverage up, whereas position traders will go for minimum leverage, expecting periods of potentially large drawdowns…
Thank you, but the reality is that I’m too Aspergerish to be well suited to forum-posting, really.
Sometimes I come across very rudely, and I’m afraid this thread was, in places, an example of that.
I have already apologised privately to Dennis for my tone in a couple of posts above and he was [I][U]extremely[/U][/I] magnanimous and friendly about it (which not everyone would have been, for sure) and I’m most grateful to him. :8:
How are you saying R:R ratios ‘don’t matter’ and that expectancy is the key, when you can’t calculate expectancy w/o knowing your average win and average loss (i.e. R:R over time)? In other words, you’re saying focus on your yield w/o being cognizant of your risk/reward over time. Cart before the horse.
Opinions aside, the gist of your entire post is misleading. You’re essentially saying that new traders should not focus on appropriate R:R calculations before entering a trade b/c they’re “not able to”? That’s like trying to teach someone how to throw a football (American) but not showing them how to grip it…
R:R (which is inclusive of proper position sizing) is the single-most important facet of trading; expectancy is a derivative of R:R. I feel you are confusing the word expectancy for accuracy.
I said that they don’t matter [I][U]in themselves[/U][/I], [B][U]without also taking the win-rate into account[/U][/B].
Expectancy is derived from the R:R and the win-rate, and neither component [I]in itself[/I] is enough to form the basis of advice.
I didn’t say that.
I didn’t even say anything [I][U]like[/U][/I] that.
On the contrary, I even took the trouble to say “Please don’t imagine that I was complaining about your advice because I was trying to suggest the opposite. That isn’t the point at all.”
That’s also not what I’m saying, at all.
You need to take account of both, together. Neither [I][U]in itself[/U][/I] can form the basis for an approach.
I wasn’t actually aware of the ambiguity in what I said, but thanks for giving me the opportunity to clarify it, anyway.
Try to spend more time on risk management education.
Very good advice indeed.
Strongly recommended, in this exact context …
(i) The last third(ish) of Van Tharp’s [I]Trade Your Way to Financial Freedom[/I] (beginner level)
(ii) Michael Harris’s [I]Profitability and Systematic Trading[/I] (intermediate)
(iii) Ralph Vince’s [I]Risk-Opportunity Analysis[/I] (more advanced)
we cannot avoid loss, so i suggest just to accept it and refresh your mind and make new plans but now make sure that its better than your previous one. be wiser now for you to not repeat getting loss again.
Try trading with a smaller lot, perhaps? Your profit wouldn’t be as big, obviously, but your loss wouldn’t be as big either. Or look into changing your strategy, if this one is stressing you out so much.