This is the power of your average
risk reward ratio over a series of trades coming into play; we will see this in action below...
Not exact matches
Over at Make Money Your Way, Rolf from Tradecitey.com explains the importance of
risk reward ratio and how to use it.
We buy stocks with the potential to go up 50 % or more
over the next two years, with a
reward - to -
risk ratio of three to one.
With a potential
reward of just
over 2 points, combined with 1 point of
risk, this setup still provides you with a decent
reward -
risk ratio of better than 2:1 (just
over 2 points
reward with 1 point
risk).
I really like the
over 2.25 goals in this game as the
risk /
reward ratio seems highly stacked in our favour.
if do the same thing
over and
over again in multiple bets
risk reward ratio is in our favour..
Professional traders like me and many others concentrate on
risk to
reward ratios, and not so much on
over analyzing the markets or having unrealistically wide profit targets.
only one thing I don't understand: If you need 50 % of wins to BE on a 1:1
risk:
reward ratio, 33 % on a 1:2 r: r and 25 % on a 1:3 r: r shouldn't you need just
over those figures to make profit??
The key to my profits
over the long term were not my win / loss
ratios it was my
risk /
reward ratios.
Statistically speaking, trading the Forex market with a 1:1
risk reward ratio and no strategy or trading edge has a 50 % chance of success (minus fees)
over a long series of trades.
Keeping it simple with an edge that plays out
over time, along with a good
risk /
reward ratio is how to survive in the game.
In my experience, I can target a 2:1
reward to
risk ratio with the bearish engulfing pattern and achieve a high enough strike rate (by combining it with a good trading system or the additional techniques below) to achieve consistent profits
over time.