A quick question, probably requiring a lengthy answer… I have a system that I’ve backtested that performs well enough. I set my stop at most recent swing low and take profit as per the rules of said system.
The question is would you ever consider risk:reward less than e.g. 1:0.75? I understand from a breakeven point of view this would have to work 57.1% of the time. Is this generally avoided?
@Falstaff
hehe… ahem… did i hear someone holler my name
i saw that bat signal above my house again
OK, here goes
PREPARE YOURSELF
YES I WOULD , Most Definitely . because it really comes down to your success rate.
Me Personally , i can trade trades that have a RISK : REWARD Of say 1:4 or 1:5
but then… in certain situations i can also trade a RISK : REWARD of 10: 1 or 5:1
because my win rate is very high
Yes, certainly, but I’d want the win-rate to be very well and convincingly proven, and really reliable.
That’s the theory.
In practice, unless either you’re trading very big positions, or the trading frequency’s very, very high, you’d probably want it to work reliably two thirds of the time, to be worth doing, with that R:R ratio.
But if it does, I’d certainly do it.
“Generally”? Most retail forex traders aren’t consistently profitable, so I suggest that you certainly shouldn’t do what’s “generally” done, and that you also shouldn’t be averse to doing things that aren’t generally done. You need to do better than and different from what “most people” are doing, to make steady profits.