My thinking is this, I use a pattern recognition strategy that will give 1.5 : 1.0 risk/reward on average. This means that my target is 150% of my ave stop. I use a different stop for different trades but all trades offer about 50-60% win rate on ave, over time. Is this the right thing......................who knows? The thing is I have a plan and if I carry out the plan it is profitable. If I make 10 trades and they are 50% winners I will come out ahead and if the are 40% right I will break even. It is not really important what you do, the only important thing is that you do it consistently and if done consistently it provides profits in the long run. There are always loss clusters and winning streaks and often you will doubt your system ( provided you have one ). Main thing here is don't go in circles about risk and profit targets just make sure what ever you do, you do consistently. Also that what you are doing, if done right, PRODUCES GAINS. AllenZ
Nice in theory, hard in practice. Another problem, is that commision costs , even at 1 cent, become a large part of the play (unless you are doing big size , for flat ticket charges) , when going for small wins.