Your logic there assumes that price will reach your 1.7x target [B]as often[/B] as it does when it’s at 3x.
Why do you focus only on R:R ? Obviously the 1:1.7 will be hit more often than the 1:3 one.
Trading results are a function of 3 things: [B]Winrate , R:R and Trade Frequency[/B]. You have to figure out which combination of these 3 variables has the best[B] long-term growth expectancy[/B] for [B]YOUR[/B] method.
If it’s not clear, a
- 90% hit-rate system that has an average R:R of 1:1 and that provides an average number of 2 setups per week
is [B]NOT[/B] better in terms of long-term expectancy than
-
60% hit-rate system that has an average R:R of 1:1 and that provides an average number of 12 setups per week
-
Expectancy per week = (90% * 1R - 10% * 1R) * 2 = 1.6*R
-
Expectancy per week = (60% * 1R - 40% * 1R) * 12 = 2.4*R
That being said, there is no standard choice that is better overall , because you have to apply the trade management to a SPECIFIC PERSONAL TRADING STYLE.
It is understandable why many people focus on having a high winrate above all else. They feel they are RIGHT most of the time and don’t care if there was a better way that they could play the setups that would make them more profitable. Of course, an argument could be made for the fact that a certain style keeps them in their comfort zone and that in turn keeps them from making stupid mistakes (Can’t force a trading style onto someone).
The main goal in this business is to [B]MAKE MONEY[/B] . Not to be right 99% of the time, not to catch huge runners of a gazilion pips and not to trade every single tick of every single day.
GL in finding your sweet spot in this equation