What Risk Reward ratio is preferable for Scalping. I use 1:2 , Is it ok
Hi again!
First I need to know what your definition of scalping is?
You have been asking about scalping in the forum. Do take the time for this fellas view
Now scalping in a traditional term is crossing the spread and taking profit. It is skill and practice that is unobtainable to us retail speculators. As @flamingoproxy pointed out, you will need to direct market access with a prime broker with a 6 figure base to work off. You will also need access to their order books and lighting fast connection. As your experience demonstrates, you are nowhere near that level yet. So lets forget about scalping period.
What you seem interested in is a death by a thousand cuts low frequency day trading strategy. Tough but do-able. Have a look at this post Lexys parting gift. Simple, elegant.
If you want to understand the work involved in developing your own strategy check this fellas thread out _Bobs price action
Finally don’t forget to look at the forest not the trees. Dennis with fill you out more Strong/Weak Analysis
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Yes, it’s okay if you go for 20 pips with 10 pips SL.
The problem with this approach is the Market is not a Roulette Wheel, Market conditions and what is driving the market will be different with every trade. You have to have the discipline to know when conditions are favorable, I like to compare this to the Prof. Blackjack player who uses card counting to know when the odds are in his favor.
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it’s perfectly ok, if that’s what works for you
but by no stretch of the imagination does it have anything at all to do with scalping!
there are no retail spot forex scalpers, for all the reasons explained so clearly in a whole list of other threads here (i provided a link to four of them, yesterday)
scalpers - in all markets - use very tiny stop-losses, far smaller than any other kind of traders, as they want to be taken out of their position immediately if it doesn’t move in their direction on their entry
This is the minimum ratio; if your trading strategy provides more than 70% success ratio then you follow 1:2 risk reward ratio; otherwise not.
this is just nonsense
sorry to appear so contradictory, but some of the people expressing their beliefs on this subject simply have no idea what they’re talking about at all!!
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I’d say that my biggest mistake starting up was taking note of what is said on forums. Particularly regarding R/R.
The problem is that the majority of people haven’t got a clue what they’re talking about and are not successful traders. My problem is that as a newbie, you have no real source of knowledge for how to do things and people on forums speak like they know what they’re talking about. Lots of people say the same thing so you follow it. Suddenly, your ability to pick a winning trade diminishes and you start losing.
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i agree
sometimes the blind are leading the blind
i guess in a beginners’ forum you may get more of that than elsewhere, too
sometimes the people with the highest post counts can even be the worst offenders
seems to me that there are a couple of things you can be reasonably sure of -
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given that the overwhelming majority of people are losing, anything that seems to be the “consensus of opinion” in a beginners forum is quite likely to be wrong
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people who can readily back up what they’re saying with links to established, authority websites MAY be worth listening to
the internet didn’t exist when i started trading, so i had a different problem from the one you mention - maybe a better problem or maybe worse, i’m not sure - but a different problem, anyway
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@flamingoproxy @chesterjohn @Luke_Ronchi @Dennis3450 @anon72277968 , Thank you for your reply and suggestions, My kind request Please answer the question shortly and understanding manner.
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my kind answer: with apologies, it isn’t possible to answer it in a way that’s helpful to you, because of the misunderstanding on which your question is based.
what will be helpful to you is to understand WHY what you’re asking about is a contradiction in terms, and that’s why in this thread and one other, i’ve shown you links both to other threads here, and to authority websites, that clarify that in simple, non-expert language (and i’ve done that partly because you seem not to want to believe me about it, and i thought it might help you to see that others with decades of experience are also saying the same thing as me, and for the same reasons)
i know you’d like that not to be true, but i’m afraid it’s factual and objective, and it just IS true, and there isn’t anything that either of us (or anyone else) can say to change that
i’m happy to try to answer any other questions you might have on this subject, if i can, but in order to ask questions that can have answers that actually help you on this subject, at some point you’re going to have to understand and learn why scalping - however gifted and talented you might become at it - isn’t a viable potential income source for retail forex traders
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I think my answer is the most relevant. Most people advising you on here don’t know what they’re talking about and you don’t know the difference between the ones that do and the ones that don’t.
My recommendation is to start a demo account and see what works. I’m not going to tell anybody how they should trade, because I’m far too inexperienced for that advice to be necessarily correct.
Nice to know your plan. Yes, discipline is very much important parameter here! There is no value of your good trading system, if you are indiscipline in nature.
Listen, suppose your strategy provides only 50% success ratio; and then if you follow 1:2 risk ratio that means; that wouldn’t be enough. Because of the verities of SL’s. Then you need to work with more healthy profit ratio like 1:3 and so on.
Luke, I dont get why 50% win rate needs 1:3 R:R.
if you have 1:2 R:R and have 44% win rate with a consistent 2% risk per trade then you have a minimal risk of ruin. which means that in long term you make money. Granted, being at the lower limit of RoR is not being greatly profitable but its long run profitable and almost no risk of ruining your account.
why you say you need minimum 50% win rate and 1:3 R:R?
Yes 1:2 is okay. Actually your strategy will define your risk reward ratio. If your strategy doesn’t allow, how you will increase it to 1:3 or more. There is no specific standard for trading as long as it works for you. But risk management is very important.
That’s the key; yes it’s possible with 50% is traders follow the rule of low risk per trade according to your parameter.
Risk Reward ratio is a distraction. Don’t be too bothered by the ratio. FOR SCALPING: So long you capped the losses at 15 to 20 pip, R:R ratio doesn’t really matter.
Scalping it basically hit and run, so I would normally go for 1:1 with the intention of making quick pips then getting out while the going is good. On longer term trades that are not affected by noise, ideally I would like 3:1
You can use 1:1 also. but how many times you are getting success is most important. If you are 7 times success out of 10 is when using 1:1 will be OK