Hello, I am backtesting strategy with ES trading. Do you calculate your risk (points loss) vs reward (points earned) before you place a trade? Any other words do you calculate ROI (R:R) before you place the order? I want to make sure I am right track with my strategy by making sure I have R:R of +2 before taking trades. This way I make sure my price entry, stop loss price, and target will reward me with at least +100% ROI (or R:R of +2) Am I on the right track as far risk management per trade? I believe I am, and this keeps me from chasing in case I don't get the entry I original planned at 100% ROI. Thank you for any input.
Every trade I make must have a reward that is at least 2-3x the risk else Im not interested. Ideally 5x, its the best way to beat losing streaks, comm and lower accuracy.
I am completely opposite as I am scalper, risk always greater than reward, so you better not lose often, risk 3pt in hopes to make 2pt. But the 3pt is more like a catastrophic area. We are all different.
Agree with both commenters. I guess you'd better choose what fits your strategy best. As of ROI, I believe for the best choice you should always calculate it first.
Thank you all for the reply. Yes, I agree. Calculating the risk first let's me manage my own trade and pick my stop loss price better.