Risk Reward Help

[tommor]

Although many people “harp” about the R:R most people don’t teach you the difference between “Expected R:R and REAL R:R”. The expected R:R is basically where you put your SL (amount of your account you are willing to risk as loss) and the reward (amount which you would win if your tp is hit). Typically people aim for anything higher than 1:1 but the REAL R:R is the amount of pips you are in red before your tp gets hit! So you could have an expected R:R of 1:1 and have a REAL R:R of 1:7
So when a person speaks about their R:R, simply ask them for their track record from myfxbook or fxjunction and you will clearly see what their REAL r:r is. So I guess what I am saying is don’t put much importance on “What R:R you should use” and instead focus on “How accurate can my entry be” so that your REAL R:R is out of this world.

This is bang on the money, most prospective r:r ratios people quote for their strategies are made up, with only a hope and a prayer as evidence.

[TrumpHack]

@tommor

This is bang on the money, most prospective r:r ratios people quote for their strategies are made up, with only a hope and a prayer as evidence.

It sure is. It is a shame some of the Senior members don’t take the time to explain that to the guys here.

Here is a live example…

So you can see I am Long on GJ. The Green line is my TP and the SL is represented with a close at or below the red line. So there you can see my R:R (expected) is about the same 1:1 but the Real R:R will not be determined until either the TP or SL is hit. That is by far one of the most important stats which I follow.

The picture above shows the “REAL R:R” highlighted in red. Clearly you can see the trader risked (drawdown in pips) more than he profited. which is why his ratio is 1: fraction. You will see many of these “Gurus” hide these stats because it will reveal how weak their system actually is. If you simply want to see how good a trader is, ask him/her to share his/her stats and break down each trade.
Many people simply look at “profit/loss” and crowns a person a good trader off of those merits, when the reality is bad traders win, while good traders lose but the stats won’t hide the type of trader you are.