Sorry IAlwaysWin, I will always use a protective stop for all my trades. I do not not trade without a stop loss. Please stick to the topic of this thread.
first of all - it's a waste of time lol; secondly, if you do have a profitable pattern, be it temporary most likely.... while it does have a positive expectancy then the risk/reward ratio doesn't really matter.... that's just basic statistics.
Thanks dozu888 for the response, This is good to read and confirms my thinking that no matter the risk/reward ratio, postitive expectancy is the goal.
tommcginnis, Just to make sure I understand you, are you stating that Expectancy is what important rather than reward vs risk?
expectancy comes with being in synch with context. I am now concentrating on seeing a context and holding the trade till the context changes.it is context that decides which trade signal I take. and it has made trading extremely easy for me I see no point in closing the trade at a particular risk reward
Having worked out a nest of systems to trade trends over the past 2+ years (having migrated bread&butter trades from vertical options spreads), I'll note two mistakes here: • A trade exit signal is absolutely NOT a signal to enter a trade in the opposite direction. My own aphorism is "Enter on a shout; Exit on a whisper." • The idea that "you'll find that you'll break even at least 60% of the time if things go against you" would be a generalizable statement is VERY problematic: it is entirely dependent on the underlying system/algo, and not-at-all dependent on the mere reversal of position. No no no! Reward-to-risk is a ratio of user-defined impacts from trading. What is expectancy? Reward-to-risk, plus the associated, experience-derived probabilities. Hmmmmm.
Exactly the reason why over 90% of retail traders blow accounts. The system isn't good enough to withstand this test. My strategy is 100% dependent on its underlying algorithm for exits. I'm speaking out of experience, from a person that builds systems that auto trade the world's most volatile markets (without the breaks.) And I don't trade trends, I predict them.. If your system can't pass this test, your wasting your time!
I attempted "targets smaller than stops" before. I thought it was working and could continue to work, but abandoned the method pretty quick as I was annoyed by the inevitable times where I dropped 3 or 4 in a row, and then had to win the next 6 to 8 just to get back to par. Doesn't suit me. With reward greater than risk, the win rate obviously drops and losing streaks are longer, but dropping 6 or 7 in a row and only needing to pick up 3 or 4 to end a drawdown and start building again, is easier to deal with (for me).