POLL: win rate, reward:risk ratio

Discussion in 'Risk Management' started by uktrader2016, Feb 2, 2016.

POLL: win rate, reward:risk ratio

  1. A high win rate e.g. 70% with a low reward to risk e.g. 1:1

    38.9%
  2. A low win rate e.g. 35% with a higher reward to risk e.g. 3:1

    61.1%
  1. if you are making money being dumb and anti fragile, you really don't need to be smart. All being smart will do is make you more fragile.
     
    #21     Feb 3, 2016
    K-Pia likes this.
  2. K-Pia

    K-Pia

    Contrary to common sense.
    I believe that a low Reward to Risk is Riskier.
    People tend to pick pennies in front of steamroller.
    They think it will give them a chance to succeed where,
    You actually have 50% chance of going broke with a 1:1
    33% with a 2:1, 25% with a 3:1, 20% with a 4:1 ... Etc ...

    Because you need to be inversely good to succeed.
    We can control R:R but not how good we are.

    Therefore a 4:1 gives you more room for error.
    You only need a P(G)>0,25 with a 4:1.
    But P(G)>0,5 with a 1:1 ...
     
    #22     Feb 9, 2016