You see lots of posts and articles about risk reward ratios in forex.
I get the idea of using them to manage risk.
My question is about long trends.
On the daily chart I currently see several long trends. We are talking weeks and or months in length.
My question is, how would I be able to capitalize on these long trends if I’m using risk reward ratios?
It seems that my take profit would be hit long before the or a trend subsides.
What am I missing?
You are not missing anything, these opportunities are brilliant to get huge returns like 10 20 or even 30x returns on your risk. For me there is no set profit loss ratio to close my trade because now I have x amount of pips in profit. I exit my trade based on where I expect the price to go, so if I make 2x return on my risk or 10x return on my risk, it doesnt matter, the process is still the same for me.
[quote=“Traders_Approach, post:2, topic:173673, full:true”]
You are not missing anything, [/quote]
I agree with above. I use Return On Investment. Risk is not based on possible return, but on % of trading capital. I draw support and resistance from the daily, four and 1 hour charts. Then enter on a trend pull back and work the trade from one hour time frame. using take profit targets and trailing stops. My trades are based on price action between support and resistance as well as the currency pair swings. Basically I trade smaller trends within the longer trend based on longer time frames.
I have a lot of rules that I trade by, but the main one when it comes to money management is; I don’t try to pick tops and bottoms or guess at start and finish of a trend, I pick profit in between and re access my position as I go within the larger longer term trend. I don’t care if it’s, pips, points as long at Friday close, I increase my bankroll by some %. It could be one or one hundred as long as it’s somewhere in between at close.
Having said above, In my opinion, trying to maximize trading profits using arbitrary RR ratio won’t get you there. However if you’re new and don’t truly (not in your own mind, but reality) understand how price moves, when and why based on a balance of probabilities of the particular pair you’re trading. Some form of RR ratio is probably a good way to start.
Again my opinion
Gp
Hi @mitsufisher
I am going to go against the “trend” here and claim that you are actually missing a lot!!! 
Although R:R is not wrong as such, it is only one component of a total risk/money management package and therefore incomplete if used alone.
The most obvious missing component that should accompany R:R is the success rate of your trading method. For example even if you consistently apply an R:R of 1:2 then the results will be totally different if your trade success rate is normally, say, 30% or 70%.
Another important component is your position size. If one trade succeeds with an R:R of 1:2 with X lots and then the next trade fails with the same R:R ratio but with 3X lots, then the overall result is negative.
With short term, high volume trading R:R, success rate and position size are all important, but…
…you are specifically interested in long term position trading and in that kind of situation R:R tends to become meaningless because long term trends do not, unfortunately, flow in rhythmic sine wave type patterns with constant wavelengths and amplitudes. Every trend is unique as it gradually unfolds.
This means that any pre-set R:R is simply an arbitrary ratio providing an arbitrary target/stop that sometimes the price will fall short of, sometimes hit bang on, and sometimes sail right through and onwards “for ever”.
I cannot say as fact, but I believe most long term position traders do not focus just on a specific R:R. Rather, they concentrate on their technical setup (or whatever approach they use) to first define the quality of their potential trade entry and, if acceptable, then define the danger area where they will abandon the trade if the price goes there. They may also define a target area based on higher timeframes, for example, or they may just let the trade run until their technical setup eventually provides a reason to exit and/or reverse.
In these long term position trades, rather than set an R:R, it would make sense to manually reset the stop level (either mental or physical) as the trade progresses based on the evolvement of the technical setup, e.g. after a pullback/correction/continuation etc. Once the stop has reached breakeven then the trade is relatively safe to leave until a defined exit reason appears.
in brief, with long term trades, rather than just set an arbitrary R:R, focus on:
Maybe others will disagree with this but at least it is food for thought! 
I never let r:r decide strategy, it is just a tactic.
If you get long in an uptrend, why would you exit when price reaches a point in the trend at which you fulfil your r:r imposed requirement but from which it is equally or more likely to rise than from the place where you originally entered?
So let’s say you think there’s a 60% probability price will rise from where it is now so you buy. It reaches a level at which it is now 70% probably going to rise. NI’m not suggesting you calculate these figures, just that you take a TA-based view on what’s likely to happen next. At the 70% level, it would be foolish to exit.
But if it reaches a level from which it is only 50% or less likely to rise, you might as well exit, whatever the r:r is, just get out. But don’t ignore this chart, you can always get back in if TA goes your way again as the uptrend resumes. In fact, its not getting BACK in, its just getting in.
The biggest downside hit I ever took on trading as we do it - was through trying to get in on a long -term “trend” - (minus 600 pips before I saw sense ! )
Part of the problem is that by the time we “see the trend” it is already old and possibly ready to turn - that paricular one was already several months old and I had already lost a lot of money trying to “hop aboard” - I finally decided to just let it retrace as far as it wanted to without a stop and hopped aboard - 2 full hours before it turned around with no warning whatever !
In fact that was on the DOW and is one of the reasons I am here - working on the basis that Forex, being “real” has certain real limits of travel and therefore should be better suited to “swing trading” than trend following.
Getting carried away with “R:R” can be very counter - produuctive and trading close stops has also cost me huge amounts of trades, by having my stop hit and then watching the trade go many hundreds of points in my original direction. For the longer term trader, this can be very problematic, especally if you are trading “support / resistance” and looking for turning points. Not so bad if you happen to be watching the screen at the time and can re-enter, but that is not usual for long term (Days or even weeks) trades.
Personally, for longer term stuff - I wouldn’t worry too much about fixed R;R ratios. The temptation is to set stops too close to give the ratio you (arbitrarily) choose and even when it goes in your direction, the huge psychological pressure is to work on the “common sense” principle of “A bird in the hand is worth two in the bush” - which we actually KNOW to be wrong ! The likelihood is you will close your bet way too early in any case !
Whereas I am just now looking at 5 minute trading, and R;R is a cornerstone of my activity.
10 pips SL and if the position of SL does not allow it to be placed outside “protective resistance”, the bet is simply not taken ! R;R is 1:2 so 20 pips TP. - However depending one what goes on after entry, discretionary exits are a possibility - though I have found the “nobody ever went bust taking small profit” principle again shows itself as both Wrong and a huge temptation.
SO this is a huge subject and probably the one which you need to work out for yourself, as it can make potentially winning bets into losers and is also the land of “missed opportunity” and “Self hatred”
There is really no “Right or wrong” answer since the same Gamble never appears twice - every bet is different and operates under it’s own dynamic. I think people can state “easy rules” fof R;R and also for money management in general, but “Easy rules” and “Common sense” are not really your “Friend” - any more than the oft stated “trend is your friend” is a great principle !
All depends on the way you carve your own path.
Good luck 
This site is like a targeted ad following me around constantly reminding me of the mistakes I keep doing lol
Ain’t this the truth.
I’m a little off topic here but this is also my preferred approach. Although I would phrase it as taking smaller chunks out of a longer timeframe.
The pyschology of the crowd when entering a trend from no positions is very different and much slower to the pyschology of scrambling out of a trend when all the participants are holding positions with pips. Which is why both short and long trends often end off a cliff after a long slow drag up/down hill!
The only good pip is a banked pip, the rest are still only glowing green from the other side of the rainbow.
So i like to think that i can combine two commonly held beliefs:
I watch daily/4hr charts for the direction and take chunks with the 1h/15min. I don’t care about the rest of the moves that _“i could have had if only…”
Combining the best characteristics of long term charts with those of a short term trader works for me and i am never sat holding and worrying about positions when I’d rather be doing something else.
But we are all wired differently…
FOREX trading is a very statistical based trading where you need to have a LOT of discipline, track every single trade you make, know your odds, your win to loss ratio, use proper risk reward, risk-management, have low expectations, you need to understand supply and demand, find you what works for you rather than follow someone else system, don’t make overuse of indicators, and don’t try to guess where the price is going but have a trading plan with realistic stop loss and take profit levels.
Apart from that it’s quite simple really…
There is no disrespect for his opinions intended. . Just thought, in my opinion a little clarification might help you out; again no disrepect intended
Gp
[quote="DonaldTrr, post:9, topic:173673, full:
FOREX trading is a very statistical based trading where you need to have a LOT of discipline,(TRUE)
track every single trade you make, (TRUE)
know your odds, (CLARIFY" Base your trade on the balance of probabilities first. Calculate entry, potential loss and potential profit then look at your odds.
your win to loss ratio, (TRUE)
use proper risk reward, risk-management, (proper is defined by different traders)
have low expectations,
you need to understand supply and demand,(Absolutely)
find you what works for you rather than follow someone else system, (Not necessarily; In the beginning try systems that fit your availability an time to practice) As you go tweak the system and build your own system rather than trying to guess
don’t make overuse of indicators, (Use as many as it takes so you can learn. I started with a trader who used indicators for trend, momentum cycle, support and resistance, Today it’s Support/Resistance and at time I use one or two to confirm my observation,)
and don’t try to guess where the price is going but have a trading plan with realistic stop loss and take profit levels.(Absolutely) [/quote]
No doubt in forex trading there are involved many statistical issues.You have to calculate your risk , reward before entering in marker. choosing different lots will be calculated differently , SPread count is another issue. Trader has to focused many things associated with trading them market analysis is another thing he need to know. When we talk about risk we plan for profit or loss ratio when position will open in market
I agree with most of what you said here. Others were talking about long term trend versus the combination of long- and short-term trends, and no one mentioned using short-term charts alone. I use 1m-1hr-4hr-daily-weekly charts for a 1m scalping strategy I can eventually automate. I also use the same time frames for a strategy that is for larger less volatile positions daily, weekly, and monthly duration. I think slippage is an important issue for adding size to a position based on retracement or trend following like others mentioned. You can choose 10 pips on a large trend following position versus trying to make 100 pips on 50 different positions that utilize short term charting. The choice is obvious because long-term charts offer reliability and larger profits, while larger positions held for a longer time are also more profitable.