Risk Reward Ratio

I’m going through right now and writing my trading rules and just thought about my risk reward ratio. I am looking for opinions from other members on their risk reward ratio that they use. I am leaning toward a 3:2 ratio at this point. Makes it simple for me to only risk 2% of my capital at one time. Anyone using a 2:1 or 1:1?

Thanks in advance!!!


My system uses a Risk/Reward ratio of 1:1.5

I do not use a fixed risk:reward ratio. Before placing a trade, I look where my take profit will be based on the next past area of resistance on that time frame, and then look at where my stop will be based on the next past area of support. If the next area of resistance is relatively close vs where my stop would be placed based on past support, I will not place the trade. I look for at least 2:1, but there is no fixed ratio for where my take profit and stop will be.

Is this a purely mechanical system generating exact Entry, SL, and PT - or do you plan to “manage” your trades? A little backtest can help you see what may be reasonable to expect based on your entry rules.

I like fewer trades and longer time frames. I also trail fairly close stops once the position is on.

mugen may be on to something there…

Dear Friends,
I trade Forex professionally for many years now and found that 2:1 reward to risk ratio is most used among my collegues. Higher reward to risk ratio is not easy to find in you every day trading. Less ratio will not give you the best results. This 2:1 ratio is not the rule but my experience shows that most professional traders prefer this choice.
Sincerely yours,
Louizos Alexander Louizos

PS: This risk to reward ratio is part of a big chapter in trading that is called money management. Would you like to discuss a bit about money management?

yes, alouisosfx I think we should start a money manegment thread, probably a new one though.