RISK 2 REWARD ratio is the key I know almost every trader has asked themselves these questions:
How come I keep losing?!
WHY?!
Why do I keep getting stopped out?!
Why is it taking so long? !
Is it even possible?! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Today I have some good news for you maybe you already know this maybe you don't, but this is for those folks who do not know the power of a good Risk to Reward ratio.
Let me tell something real quick you do not have a 80% winning rate not 70% I am going to say not even a 50% winning rate to be profitable ( Hold ON A MINUTE man HOLD the bus man... serious) dead serious.
With a risk to reward ratio of 1:2.5 you only need to win 30% of your trades to be profitable ( see below )
SAY YOU execute 10 trades and you only win 3 so essentially 30%
LOST:7 WON:3
Total loss: Total profit:
7 * 1 = 7 3 *2.5 = 7.5
Total profit - Total loss = +0.5
Now even though 0.5 is not a lot at least it's not a loss.
But there are a few things extra to keep in mind :
1) Your risk to reward has to stay the same for the period of the 10 trades
2) Your lot size needs to stay the same
3) AND as possible try to keep the amount of pips the same for your ratio because it does not help if you win 3 trades and you decided to set one of your positions SL as 100 pips and its TP as 250 pips and the rest of the positions SL as 20 pips and TP as 50 pips. If you lose the the big trade and hit the SL of a 100 pips its gonna through everything out of wack. So be sure to try and keep everything as consistent as possible and it will be a matter of time before you see profits.
Trade with H
