Negative Reward:Risk Strategy - Formula for Analysing Optimum RR Ratio

Trading Discussion Risk Management Practices
1

Hey there

I’m having some successes with a negative reward:risk strategy. Obviously there are losses at times and I’d like to mitigate the size of these losses by using a formula to analyse my optimal risk size.

I record the following data as part of each trade:

Entry
Close
Max Negative Price (Furthest point from entry where price moves before closing)
Difference (Max Negative Price - Entry)

My maths terminology is probably way off, but I think the formula would somehow assign a base integer of 1 to the difference between Entry and Close, and then assign a value to the difference between entry and Max Negative Price. It’s probably easier to have it expressed as percentage, so if risk was 4x greater than reward, the output would be 400%

It would be great if the formula could account for trading JPY as well, but my main currencies are NZD, GBP, USD and EUR.

Thanks in advance for your help; really appreciate it.

Cheers

Ciaran

3

Hi, you can also trade in one direction with a positive swap. Regards Greg

4

Risk reward is an important element in trading. If a trader does not properly maintain risk, he will never be able to consistently profit. As a trader, I always try to maintain risk rewards. There must be a loss in trading, the risk-reward is very important to cover this loss.