Minimum reward to risk ratio

Trading Discussion
1

Hello traders,
I have recently increased my minimum reward to risk ratio to 1.5:1.
What is your minimum target?

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2

my absolute minimum is only 0.5 of the risk, but that’s a really rare minimum, and normally 1:1 is my lowest reward-to-risk

it’s very difficult to work out, though, because i add to winners, so sometimes it works out much higher

it’s the classic question in response to which groups of “professional traders” (maybe including former pro/institutional traders now trading independently) and groups of “forum members” and especially “people who learned online” will always have hugely, radically different answers! :grinning_face_with_smiling_eyes:

many people actually trade successfully for decades (not just years) with an R of 0.5, and very, very high win-rates (they’re not trading spot forex, of course, and they’re not posting at Babypips, as they‘re not beginners, but there are plenty of them about!)

many professionals will give anything between 0.5 and 0.75 (i.e. 0.5:1.0 up to 0.75:1.0) as their answer, whereas some retail traders will say they don’t trade with an R below 2 (i.e. 1:2!!); some may even say 1:3!!! (i think that’s crazy, myself, and often responsible for failures, but there it is)

3

RRR is total rubbish, because it is critical to place your T/P where you expect the price action would reach, usually just before a resistance zone. Then you can place your S/L accordingly.

Otherwise it’s just guesswork.

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4

I get what you’re saying, but I think going for scalp profits is equally puzzling. I think a reasonable swing profit is 1:2 RR, don’t you? You have to make up for inevitable losses. Anyway, JMO>

BTW, how’s it going with the prop trading? Are they treating you well?

5

I do not use or spent time on R:R:R to me it is just a kind of a stress factor

The markets moves in waves, never forget that, the market is dynamic and moves around and not two trades are 100% the same, mean you can not just c/p and use 100% the same setup each time, like as an exsample use a 10 pips SL and 30 pips TP is a “dead man walking” setup to me.

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6

The rationale of where to place my T/P could be at any length from the current price action. Where I place mine is also dependent on my risk exposure management. As my long term strategy wins are around 55%, I have a leeway as to where my S/L is also placed. And I only place trend trades.

So far my prop demo trading of 10 trades to date, with 7 wins (+$138) and three losses (-$50) with a required 10:1 leverage and an acceptable lot size of 0.2, shows a (64%) $88 profit to date.

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7

:sunglasses: it’s only a question of time, really … which is why a no-time-limit one is so important; i don’t want to put a jinx on you by “speaking too soon,” but i give you a better chance (by far!) than anyone else who’s ever posted here about a funding try-out :sunglasses:

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8

I do place my take profit and stop loss based on technical analysis. If the setup has worse reward to risk ratio I don’t take the trade.

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9

I use a wide SL, but let us say i throw a 100 on the table, and we have a market from 0 to 100, then we draw a line in the middle a 50 line, ok so far so good.

If i enter at the line 50 then i place 5 trades above the 50 line (buy) (each 10 pips) and a SL below the 50 line, just so i can explaine it simple, if any asking why ?
I make room for the waves. a wave can come near or hit my TP 1 and go down below the 50 line (the danger zone) and then go up again and aim for TP 2 and so on and i take some profit off the table when this trade is alive, i hope this make sense.

The other 50 that are left i place as SL same way buy orders above and i maybe take a hit on SL 1 but the wave goes up again and activate my entry 2 etc,

My trade entry is same as my TP 1-2-3-4-5 but i will never have a SL of only 10 pips this is just an exsample how i setup a buy trade.

10

I personally don’t use a specific risk to reward ratio. When I place a trade, based on my analysis I just make sure that the stop loss is set at a sensible position that it will let me trade breath, and my take profit is set at a sensible position that it is likely to be triggered.

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11

i always try to keep 2% risk ratio when trading in a live account , but that is totally impossible to keep same risk ratio for all time , because market is too much volatile to predict with certainly.

12

It’s all depend on your win rate. and I believe that win rate must be calculated on different Trade types. as a Trader could trade with different risk levels.for example SCALPING and TREND following approaches have less risk level compare to Breakouts and Reversals. So the R/R may and must be different on each type of trades.

13

honestly, you couldn’t make up some of what gets posted here :sweat_smile:

profound, man - just totally insightful :crazy_face: