I’m not aware of this method already being shared here on the internet but I’m certain the idea has already been put out there.
I’m messaging here to share the idea for feedback. It’s easy to get blindsided by an idea and then fail to see its flaws.
Simply, all it is is increasing the risk-to-reward ratio after every loss.
I thought about when I was exploring other risk management techniques, such as Martingale and dollar cost averaging. I personally wouldn’t use either of these techniques because of the risks associated with them.
But my idea is to trade as normal, i.e. find the best and most likely setups. Set the initial risk to reward as 1:1.
If that trade loses, the next trade will aim for 1:2.
If that trade loses, the next trade will aim for 1:3. And so on.
The idea is that you recoup the losses, plus come out with a full return.
Once the target has been hit, you start back at 1:1 risk reward again. Obviously, you can go on a winning streak to build your account, and if you do get any losses, they are made up in the subsequent trades.
The only real weakness I can see with this is a continuous losing streak, where the risk-reward then becomes massive. I can see this would also add pressure to your trades.
However, to attain a big win at some point is not so difficult, and if you just let each trade run until its target, often the price goes parabolic and would hit any target.
Any feedback would be appreciated.