Risk higher then reward ratio ?

Discussion in 'Trading' started by ET Member, Jul 24, 2010.

  1. ET Member

    ET Member

    Anybody here trade with a higher risk to reward ratio.I always read that your reward should be higher then your risk on trades,but the system that I am working on does better with a 60 point stop and 40 point goal (ym)and has done so every year with 5 years of backtesting ?
  2. I trade with higher risk than reward. Almost double. I get a 1.8 profit factor doing it. Must use good money management and take a hard look at the system draw down.

  3. the only time id consider using double risk is if the accuracy was 75%+. The fact is if you lose 2-4 times in a row (which is not that rare) then youd have to win 4-8 times in a row just to breakeven. mentally that can be draining.

    In fact, doing the math you with double risk for reward, youd have to be right 66.6% of the time just to breakeven.
  4. 100% right. My system tracks at around 80% accuracy enabling me to run a wider stop than my target.

  5. No.Heat


    Nothing wrong with that, you just need exceptional accuracy.

    Even better to have exceptional accuracy and risk reward ratio, therefore, why settle for something inferior?

    No Heat
  6. Its all about positive expectancy look it up .
  7. Could you describe your stop and take profits orders? For instance is your stop order always on, is it mental, and if mental when do you check it? Same for take profits.