risk/reward ratio

Discussion in 'Trading' started by vtt, Oct 6, 2006.

  1. vtt


    i am new to emini trdaing. Theres a system out there that brags they have a 19:1 risk/reward ratio. this makes it seem like a "safe" system. And they show a 100% -200% profit per year. Does this seem attainable?
  2. Does it sound reasonable to you? I do not think that risk/reward is attainable in daytrading unless they are risking 19 to win 1. That is very attainable.

  3. There are no "safe" systems, except FDIC-insured CDs or US Treasury issues. Assuming you mean 19:1 reward:risk and not risk:reward, this seems like a highly improbable figure. I would be suspicious that the risk figure represents the realized loss on closed positions, and not the maximum drawdown on open positions (and those might be only simulator-generated trades) .

    If you're talking about a capital base of less than six figures, then a good trader can definitely make the kind of returns you mentioned (but with a much lower reward:risk ratio). However, I doubt you're going to see those returns in a for-sale system. If someone could really generate those kind of returns with that little risk and they had a legitimate track record to back up their claims, then they'd be earning 2 and 20 on managed accounts for wealthy clients.

    Why do want to rely on someone else instead of learning to trade on your own?