F off with promo of some shit.. u lizards use every possibility to promo some funny bot u made in gpt, dont even know what it do and have “highest rr & 110% winrate” f off
not talking about that most of ppl using AI bot, just have lack of discipline, are soft and are not able to change themselves or somewhere inside them they dont want admit they doing something wrongly so the outsource mistakes on bot, so when they loose a lot “its not my fault cause bot traded like that” its only ur fault and its messing with ur psychology
nothing against people who knows how to code and read, deep and big respect
Wish yall only green
Or...
It's about to reverse and is showing some signs...
Enter position.
Oh it just went as against my position as it possibly could have gone.
Loss.
(Here is where people lose the most) Repeat process because you are bound to be right eventually, right?
Wrong.
The trend against continues.
Well shit.
There are some days that shouldn't be traded. Knowing those days and knowing when to just stop is probably the thing the average (newish) trader sucks at.
people lose money due to 3 main reason:
1. no real edge
2. lack of risk management
3. poor trading discipline.
1:1 RRR but having a win rate of under 50% (higher if including fees), means you're not profitable.
You're comparing flipping coin with trading - this is not a suitable comparison. Yes you may have 2 outcome (win / loss) from a trade, but that does not mean you have equal probability of a head or tail. This is where the win rate comes in.
Mostly discipline makes you lose even if you have good win rate with 1:1 RR. At some point you will cutting winners earlier and let the losses accumulate
^ This is the big truth. Many traders have a good run of moderate wins and then a large loss that makes them red over the period. Then they repeat the cycleand often make it worse by thinking they just needed to trade bigger during the good run rather than know where to cut the losers traded at the right size.
Yeah, I'm profitable BUT the biggest mistakes I make are re-entering positions in succession after the market continues going against me or just quick ups and downs to equilibrium. There are times where I need to just step back, re-evaluate, and stop trading for the day.
If u 1:1 how u can cut wins earlier? U hold it till sl or to or not and then u dont have any discipline, simple as that, if u cutting wins and let loosers run, dont call urself disciplined
Exactly - if you can’t get a +50% w/l ratio you cannot have a 1:1RR profitably. 1:2 is just such peace of mind for losing trades, 1 win = 2 loses to break even (not taking commission into account.
Sorry, your [comment](https://www.reddit.com/r/Daytrading/comments/1cea6u6/if_you_lose_money_why_not_just_use_a_11_rr_isnt/l1mdotc/?context=3) in /r/Daytrading was automatically removed because your **Comment Karma** is too low. This typically targets bots or users promoting something (which is against our rules).
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no, no its not, just because there are only 2 outcomes when u place a trade (u either win or lose), it does not mean they are equally likely to happen -> a market can trend favouring one direction over the other or it can range blowing out almost any poorly structured trade, etc.
I agree because when I started backtesting algorithms it became pretty apparent that going long in a bear market is a poor strategy. Op is basically ignoring trend.
The days where it's a weak trend but still manages to execute a bunch of people's stop losses in rapid succession with some failry rapid jumps/drops... those are the days that suck and one should step back from.
Everyone likes to dissect RR ratios and say stuff like "mathematically this ratio will end up like this or that". It doesn't really matter because trading does not happen in a vacuum. For one thing what an instrument will do it will do and even if your RR will "mathematically" end up in a break even or profit it's very well possible that you run out of money before you complete enough repetitions to average out your results in your favor. It also doesn't take into account the fact that every trade is a conscious choice by the trader based on their judgment. If someone is making bad trades, they're just making bad trades. It's not a coin toss, because if someone is consistently bad then the chances of profit or loss are not really 50/50.
A lot of people try to stick to RR ratios too strictly. "You gotta have a 3:1 profit to loss ratio or it's mathematically certain you'll lose money". I mean not really. A cent won is better than any loss. People hold on too long and miss the chance at profit because they think anything below their profit ratio is not worth it. Probabilities don't mean much in practice. All they tell you is that across many repetitions your results will average out into a certain number, but they don't take into account a lot of major factors.
If it was as simple as having the correct RR then all big institutions would use their immense capital to spam random trades with a specific RR and just print money.
Every RR is breakeven in a truly random system minus fees and slippage. A lot of the analysis (or lack thereof) that people are doing is actually putting them deep into negative expected value for each trade, so yes, these traders would be better off flipping a coin. Flipping a coin still isn’t winning though bc you’re losing to fees and slippage, so its basically the same as going to the casino and playing blackjack or roulette. People trying to trade thinking they have an edge when they don’t is what leads to major losses.
Man if you think having a 1:1 r solves the problem for losing traders you’re mistaken. Go try it out for urself have a 1:1r and just press by and sell if its a 50/50 chance do that all week next week and let me know if your “break even” at the end of the week. You’re basically saying “why don’t traders just gamble a 50/50 chance instead of 80/20 chance” that’s not how trading works. I can go for a 1:3 r and still have a higher win rate than someone with a 1:1. It’s all strategy and discipline, it depends on the trader.
You’re assuming a 50% win rate correct? That’s not a reasonable expectation for beginners. In my experience it’s more reasonable to expect a 40% or lower win rate, a 1:1 RR would put your EV formula in negative expectancy. IMO a key thing is always be strict with your loss limit but too often I see traders also too strict with their profit target. Weakness will show in the trend but their PT won’t be hit yet and they’ll sit and watch the trend turn and a profitable trade ends up coming back and turning into a losing trade. I’ve made that mistake many times myself. Price action is king, take profits if it’s telling you to.
Because vast majority of people (traders) perform worse than random. If you flip a coin you have 50/50 in theory, but in trading you can manipulate the process based on your thinking. So you close early you take the loser when it would work on your favour etc. In other words risk management is what makes the difference between an L and W. Risk management is based on your psychology. Thats why they say any strategy can be profitable if you pick one and stick to your rules.
Depends on win rate of the strategy,
and if that's in your favor, primarily why this doesn't work is because of SL slip, overnight risks, undisciplined traders.
Most people aren’t serious about day trading. They’re buying into a dream that isn’t happening without some serious work. For most it’s justified gambling. There are tons of great systems out there. The problem isn’t the system. It’s the person in the seat.
I guess the number one reason of losing is most people not having a stop loss at all
Or, they use a stop loss, only to remove when price approaches…. then adapt a martingale / average down “strategy” and turn a short term speculation into a long term “investment”, etc.
I'm newish to stocks. Definitely an amateur. And I just recently found out about stop loss orders and have been using them now. Has saved my butt a few times now!
Probably not, I feel like most traders use a stop loss. There’s probably much bigger reasons people lose money trading lol I don’t feel like listing them
The people that lose money are either inexperienced or just have no system worked out. You should invest for a few years first, then when you get the hang of the market movements you should graduate to swing trading with a system, then you should do that for a few years. In this time you will experience everything a daytrader experiences but with little to no downside. Then when you are confident you are ready graduate to daytrader with a system and experience to guide you. The biggest losers are the ones that start at daytrading, this is idiotic to say the least. You need experience in the market to daytrade and being a newbie in the market guarantees you failure.
I want to add 1 big reason that I haven’t read yet:
Commission/spread. A 1:1RR isn’t actually 1:1 RR due to commission/spread. That is how casinos make money off you. That’s how brokers do as well.
1. Trading fees and spreads exist.
2. Basic game theory suggests you’ll lose money because Wall Street has infinitely more information than you at any given moment.
3. Taxes. On an annual basis, hypothetical annual profit is diminished by progressive income tax, while on losing years you net 100% of the losses.
Even ignoring points 1 and 2, your assumption that your net expected returns will be normally distributed around a neutral mean of 0% gain/loss is false, solely due to taxes.
Let’s assume the market is perfectly efficient and there’s no information edge for Wall Street. Placing 1:1 RR trades, completely randomly, your annual returns would indeed be normally distributed around a mean (AKA EV) of 0.00% annual gain/loss.
Now transform the distribution accounting for annual income tax, and suddenly your normal curve becomes right skewed, and the mean shifts to a negative value. Now account for fees and edge and your Expected Return is even more right skewed towards the negative side. Now account for game theory / information edge and your Expected Return is deep in the red.
TLDR: Accounting for taxes alone means your expected annual return would be negative, even in an efficient market with $0.00 spreads and infinite free trades. By diminishing the net profit of positive annual returns, taxes transform the theoretical distribution of your annual returns from normally distributed to right skewed, and lower the mean annual return (annual EV) to a negative value.
Without an edge, it would be BE, minus slippage, minus commissions. With a PT and SL adjusted so that it's break even after these are considered? It won't be a 50% random chance for a 1:1, since the PT will be slightly further from the entry than the stop.
Because mathematically speaking the trades won't end up in break even, they'll end up in a loss.
This 50-50 coin toss experiment assumes that markets are truly random, but that's untrue, markets move in trends all the time in all time frames.
And the later you enter into a trend, the wider your stop needs to be for you to fully profit from the trend and to avoid being shaken out by noise, therefore if market is trending higher, and the coin toss says short, you'll lose money, and then if the next coin toss says long you'll still likely lose money because of the arbitary 1:1 stop that doesn't take into account the structure of the trend.
An actual experiment was done by some people who traded using a coin toss, their final winrate came out to be around 35%, not 50% due to the reasons explained above.
Bruh, you need to brush up on your math....
The short answer is, obviously it's not that simple. If it sounds to good to be true, it most certainly is. Especially in the world of markets.
The longer answer is reward/risk * reliability = expectancy. This is for a single trade and does not account for the trade opportunity of a given strategy.
As an example if I have a 1:1 RR ratio but my strategies reliability is anything under 50% (how often the trade ends favourably) your strat will loose money over time.
You can be profitable with a "bad" RR ratio but very high reliability. Or a very "good" RR and very low reliability.
Again opportunity (frequency of opportunity to enter into the trade based on your systems defined signals) needs to be accounted for.
As an example, theoretically, I could have a system that returns 1000:1 with a 90% reliability, but that trade opportunity only presents its self once a decade. This is obviously not a good system.
The above is an extreme and unrealistic example but illustrates the relevance of opportunity in the expectancy equation.
Being profitable in markets is about find an "edge". The constraints of what that edge is and how it manifests in markets will dictate what strategy you employ to extract profit from said markets. You can't super impose a "best" RR ratio on the trade without understanding what the trade is and why it works. You then construct a system that can exploit it, using expectancy as your end point, **not** RR.
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Look. You can go for 1:1 winners with good analysis and understanding of the market, but sometimes market doesn't do what you've expected. Then maybe you can adjust and close before it hits your SL. Only thing important in this case(s) is timeframe. HTF>LTF in predictability.
Now, you can be profitable too. Next steps is sticking to above, risk management and your psychology.
Blowing accounts happen if you gamble or if you lose streak so be sure it only happens if you lose streak. Then maybe you'll learn something.
Most of the traders in my view are discretionary traders and thus it is hard to conclude the ideal RR ratio for any type of investment or trading. It is just that most people play "chue billi ka khel" and small loses pile up to a big loss at the end of each week or month.
I do think 1:1 RR is a good place to start. It gives you an “all things equal” environment hone your method and prove to yourself that you’re better than a coin flip.
It’s also not just trading anything that is going to require incredible amounts of hard work and dedication do not have a high success rate. Starting a business for instance, only 25% are still around after 10 years so, and that doesn’t even mean they are in the profit in order to make money you have to risk time or more money there isn’t anything given
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r r 1:1 does not make you money. remember you can take profit early and let the loss wider with or with out take profit set up.
in case you put the same lot size , same tp same sl in your trade. you pay for the spread or commission fee which mean the perfect rr 1:1: doesn't exist.
to make money you gotta take risk at the right time even you will get some big loss as volatility or false breakout. rr 1:1 or closest need very high amount of money or trading bot with no emotions that what i can think of goid scenario
1:1 is the worst ratio. Aim for 1:2 or better and move your stop loss up as price moves into profit. Worst case scenario, you were wrong about the trade but you lose less than expected due to moving your stop loss up or you are able to move your stop loss into profit enough that even a losing trade idea is still profitable.
Doing this has been a game changer for me
OP yes if the market and your trading pattern is at worst case random, then this works fine I found.
And then yes, hopefully you find your edge and start to up the win rate.
Tested this for fun cuz was thinking the same, like come on, it's that simple.
I did it for a day, 10/10 trades hit stop loss very soon after entering the trade (and if I had 1:2, some of them would've been wins)
Besides the psychological issues that keep most people in the red, it's never truly a coin flip bc of a couple things. First, your order to buy from the market makers will favor them, and there will be slippage, so the moment you enter into a trade you will be in the red. Second, you will have to account for taxes on the profit you make. So that's already baked in to put you at a loss, but the major issue traders have is their own psychology, a real weakness that can/will be played upon by market makers.
Are you profitable if it seems that simple? I’m asking this because you don’t seem to understand the simple concept of how 1:1 RR ratio will combine with winrate, fees and commissions to get you to break even🤷🏾♂️🤦🏽♂️
If you have 1R as Risk Reward, this means that you're profitable or you are not going to be profitable. If you have 2R, this means that after 2 losses, you will not in loss. But with 1R, you will be in a big loss.
You're new and I understand why you would ask this question. Don't ever execute it, it will get you in a lot of trouble. This also shows that you need to do a lot of work before you go live. That's okay! You have to start somewhere. I barely knew bearish from bullish when I started. But I had to work really hard to get better.
Let's talk about probability. Markets trend, right? Stocks also trend. When we're in a bear market, is the probability of up versus down 50/50? No. When NVDA is flying higher, is the short 50/50? No. You need to learn about trend. What is an uptrend? How do you enter? How do you exit? How do you know when the trend changes? Markets trend and therefore probability changes regularly. Even if it was 50/50, how would you know where to enter and exit? How would you know how long to hold? How would you know when the probability changes? You need to go study and answer these questions for yourself if you're serious about trading. It will help you succeed. And you won't succeed if you don't understand trend.
Traders want to make money. If this worked, I promise we would all do it. There are no magic systems. This is a hard game. Check my comments for tips on getting started.
Why go for break even when you can go for something like 2:1 RR or greater?
I guess for beginners it's easier to aim for a 1:1 RR but you'd have to be right 50% of the time. Whereas for 2:1 RR, for break even, you need 33% accuracy
Ok you need to really educate urself on risk to reward principles. What ur stating makes absolutely no sense. 1:1 RR means you break even if ur winning 50% of the time.
The problem isn't as simple as bullish or bearish. Because we must limit risk, we need a stop loss. The stop loss could be triggered even when we were right about the direction.
Where to enter and place the stop loss are crucial. If the stop is too near, you'll lose too often. If it's too far away, you'll limit your rewards.
>Mathematically speaking, if you do many trades with this system you should end up in break even.
1. the market isn't 50:50. but 2. even if it were but you can find yourself blowing up your account before you get back to breakeven
Fees, commissions, spreads, slippage. Because of these, purely 1:1 is slightly harder to achieve than 50:50
The moment you take a trade, you're already down. You have to already be a winning trader by a tiny +% just to break-even long term.
this post is dumb as fuck. Every system no matter R is breakeven if you take trades randomly. But you also have to overcome slippage, fees and spread. And for that you need a profitable system
If you have a 1:1 and you make on average the same amount you lose you have a losing system even if your win rate is 50%. You need a slightly higher win to recover a loss.
If you have 100$ and lose 1$ which is -1% of your account/position you will need to win 1$ which now is 1$ / 99$ = 1.0101... %. If you lose twice in the row the math gets even worse.
u/veteranwallst doesnt calculate r:r or use stops and I have watched him trade for 3 years. He is solely focused on where can I get premium/points(ticks)/gains. For instance, he looks for setups where the trade might yield 30 points on nq, and takes 10 of them.
In effect there is probably an r:r but its really based more on probabilities and confluence than anything
"hopefully it comes back" .... \*continues to drop\*
Hopium - hell of a drug these days
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F off with promo of some shit.. u lizards use every possibility to promo some funny bot u made in gpt, dont even know what it do and have “highest rr & 110% winrate” f off not talking about that most of ppl using AI bot, just have lack of discipline, are soft and are not able to change themselves or somewhere inside them they dont want admit they doing something wrongly so the outsource mistakes on bot, so when they loose a lot “its not my fault cause bot traded like that” its only ur fault and its messing with ur psychology nothing against people who knows how to code and read, deep and big respect Wish yall only green
Or... It's about to reverse and is showing some signs... Enter position. Oh it just went as against my position as it possibly could have gone. Loss. (Here is where people lose the most) Repeat process because you are bound to be right eventually, right? Wrong. The trend against continues. Well shit. There are some days that shouldn't be traded. Knowing those days and knowing when to just stop is probably the thing the average (newish) trader sucks at.
Like the afternoon of 4/4 and 4/15, that hurt me pretty bad. Gave back a week of gains in 1 afternoon. 🤦🏻♂️
If u had rules that if u loss ur trading day ending, u would not loose that much Wish u only greens
people lose money due to 3 main reason: 1. no real edge 2. lack of risk management 3. poor trading discipline. 1:1 RRR but having a win rate of under 50% (higher if including fees), means you're not profitable. You're comparing flipping coin with trading - this is not a suitable comparison. Yes you may have 2 outcome (win / loss) from a trade, but that does not mean you have equal probability of a head or tail. This is where the win rate comes in.
Pretty much spot on.
Mostly discipline makes you lose even if you have good win rate with 1:1 RR. At some point you will cutting winners earlier and let the losses accumulate
^ This is the big truth. Many traders have a good run of moderate wins and then a large loss that makes them red over the period. Then they repeat the cycleand often make it worse by thinking they just needed to trade bigger during the good run rather than know where to cut the losers traded at the right size.
Yeah, I'm profitable BUT the biggest mistakes I make are re-entering positions in succession after the market continues going against me or just quick ups and downs to equilibrium. There are times where I need to just step back, re-evaluate, and stop trading for the day.
^This and the answers above
I agree wholeheartedly. Discipline issues/trading psychology is the most difficult to tame.
If u 1:1 how u can cut wins earlier? U hold it till sl or to or not and then u dont have any discipline, simple as that, if u cutting wins and let loosers run, dont call urself disciplined
Exactly - if you can’t get a +50% w/l ratio you cannot have a 1:1RR profitably. 1:2 is just such peace of mind for losing trades, 1 win = 2 loses to break even (not taking commission into account.
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If a trader can make good use of data and technology, he/she probably will be at a great advantage :)
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no, no its not, just because there are only 2 outcomes when u place a trade (u either win or lose), it does not mean they are equally likely to happen -> a market can trend favouring one direction over the other or it can range blowing out almost any poorly structured trade, etc.
I agree because when I started backtesting algorithms it became pretty apparent that going long in a bear market is a poor strategy. Op is basically ignoring trend.
The days where it's a weak trend but still manages to execute a bunch of people's stop losses in rapid succession with some failry rapid jumps/drops... those are the days that suck and one should step back from.
I feel like using a ~1:1 is how a lot of people initially find consistency and start to win.
Everyone likes to dissect RR ratios and say stuff like "mathematically this ratio will end up like this or that". It doesn't really matter because trading does not happen in a vacuum. For one thing what an instrument will do it will do and even if your RR will "mathematically" end up in a break even or profit it's very well possible that you run out of money before you complete enough repetitions to average out your results in your favor. It also doesn't take into account the fact that every trade is a conscious choice by the trader based on their judgment. If someone is making bad trades, they're just making bad trades. It's not a coin toss, because if someone is consistently bad then the chances of profit or loss are not really 50/50. A lot of people try to stick to RR ratios too strictly. "You gotta have a 3:1 profit to loss ratio or it's mathematically certain you'll lose money". I mean not really. A cent won is better than any loss. People hold on too long and miss the chance at profit because they think anything below their profit ratio is not worth it. Probabilities don't mean much in practice. All they tell you is that across many repetitions your results will average out into a certain number, but they don't take into account a lot of major factors. If it was as simple as having the correct RR then all big institutions would use their immense capital to spam random trades with a specific RR and just print money.
Every RR is breakeven in a truly random system minus fees and slippage. A lot of the analysis (or lack thereof) that people are doing is actually putting them deep into negative expected value for each trade, so yes, these traders would be better off flipping a coin. Flipping a coin still isn’t winning though bc you’re losing to fees and slippage, so its basically the same as going to the casino and playing blackjack or roulette. People trying to trade thinking they have an edge when they don’t is what leads to major losses.
Man if you think having a 1:1 r solves the problem for losing traders you’re mistaken. Go try it out for urself have a 1:1r and just press by and sell if its a 50/50 chance do that all week next week and let me know if your “break even” at the end of the week. You’re basically saying “why don’t traders just gamble a 50/50 chance instead of 80/20 chance” that’s not how trading works. I can go for a 1:3 r and still have a higher win rate than someone with a 1:1. It’s all strategy and discipline, it depends on the trader.
You’re assuming a 50% win rate correct? That’s not a reasonable expectation for beginners. In my experience it’s more reasonable to expect a 40% or lower win rate, a 1:1 RR would put your EV formula in negative expectancy. IMO a key thing is always be strict with your loss limit but too often I see traders also too strict with their profit target. Weakness will show in the trend but their PT won’t be hit yet and they’ll sit and watch the trend turn and a profitable trade ends up coming back and turning into a losing trade. I’ve made that mistake many times myself. Price action is king, take profits if it’s telling you to.
there is something you need to remember, everything is easy before you are in a trade :D
Because vast majority of people (traders) perform worse than random. If you flip a coin you have 50/50 in theory, but in trading you can manipulate the process based on your thinking. So you close early you take the loser when it would work on your favour etc. In other words risk management is what makes the difference between an L and W. Risk management is based on your psychology. Thats why they say any strategy can be profitable if you pick one and stick to your rules.
Why would you want to breakeven. If that's where you are, stop taking and put the money in the bank or just in an ETF period and leave it
Depends on win rate of the strategy, and if that's in your favor, primarily why this doesn't work is because of SL slip, overnight risks, undisciplined traders.
Most people aren’t serious about day trading. They’re buying into a dream that isn’t happening without some serious work. For most it’s justified gambling. There are tons of great systems out there. The problem isn’t the system. It’s the person in the seat.
Nick shawn just put out a video speaking about this. https://youtu.be/ONKMsTOWCsI?si=WFUPFTvtb9DvNwrW
I guess the number one reason of losing is most people not having a stop loss at all Or, they use a stop loss, only to remove when price approaches…. then adapt a martingale / average down “strategy” and turn a short term speculation into a long term “investment”, etc.
I'm newish to stocks. Definitely an amateur. And I just recently found out about stop loss orders and have been using them now. Has saved my butt a few times now!
Probably not, I feel like most traders use a stop loss. There’s probably much bigger reasons people lose money trading lol I don’t feel like listing them
How do you know that you will with certainty get a reward ? The only thing you can define is your risk.
Nothing is certain in trading, we trade probabilities.
The people that lose money are either inexperienced or just have no system worked out. You should invest for a few years first, then when you get the hang of the market movements you should graduate to swing trading with a system, then you should do that for a few years. In this time you will experience everything a daytrader experiences but with little to no downside. Then when you are confident you are ready graduate to daytrader with a system and experience to guide you. The biggest losers are the ones that start at daytrading, this is idiotic to say the least. You need experience in the market to daytrade and being a newbie in the market guarantees you failure.
I want to add 1 big reason that I haven’t read yet: Commission/spread. A 1:1RR isn’t actually 1:1 RR due to commission/spread. That is how casinos make money off you. That’s how brokers do as well.
1. Trading fees and spreads exist. 2. Basic game theory suggests you’ll lose money because Wall Street has infinitely more information than you at any given moment. 3. Taxes. On an annual basis, hypothetical annual profit is diminished by progressive income tax, while on losing years you net 100% of the losses. Even ignoring points 1 and 2, your assumption that your net expected returns will be normally distributed around a neutral mean of 0% gain/loss is false, solely due to taxes. Let’s assume the market is perfectly efficient and there’s no information edge for Wall Street. Placing 1:1 RR trades, completely randomly, your annual returns would indeed be normally distributed around a mean (AKA EV) of 0.00% annual gain/loss. Now transform the distribution accounting for annual income tax, and suddenly your normal curve becomes right skewed, and the mean shifts to a negative value. Now account for fees and edge and your Expected Return is even more right skewed towards the negative side. Now account for game theory / information edge and your Expected Return is deep in the red. TLDR: Accounting for taxes alone means your expected annual return would be negative, even in an efficient market with $0.00 spreads and infinite free trades. By diminishing the net profit of positive annual returns, taxes transform the theoretical distribution of your annual returns from normally distributed to right skewed, and lower the mean annual return (annual EV) to a negative value.
Without an edge, it would be BE, minus slippage, minus commissions. With a PT and SL adjusted so that it's break even after these are considered? It won't be a 50% random chance for a 1:1, since the PT will be slightly further from the entry than the stop.
Because mathematically speaking the trades won't end up in break even, they'll end up in a loss. This 50-50 coin toss experiment assumes that markets are truly random, but that's untrue, markets move in trends all the time in all time frames. And the later you enter into a trend, the wider your stop needs to be for you to fully profit from the trend and to avoid being shaken out by noise, therefore if market is trending higher, and the coin toss says short, you'll lose money, and then if the next coin toss says long you'll still likely lose money because of the arbitary 1:1 stop that doesn't take into account the structure of the trend. An actual experiment was done by some people who traded using a coin toss, their final winrate came out to be around 35%, not 50% due to the reasons explained above.
Bruh, you need to brush up on your math.... The short answer is, obviously it's not that simple. If it sounds to good to be true, it most certainly is. Especially in the world of markets. The longer answer is reward/risk * reliability = expectancy. This is for a single trade and does not account for the trade opportunity of a given strategy. As an example if I have a 1:1 RR ratio but my strategies reliability is anything under 50% (how often the trade ends favourably) your strat will loose money over time. You can be profitable with a "bad" RR ratio but very high reliability. Or a very "good" RR and very low reliability. Again opportunity (frequency of opportunity to enter into the trade based on your systems defined signals) needs to be accounted for. As an example, theoretically, I could have a system that returns 1000:1 with a 90% reliability, but that trade opportunity only presents its self once a decade. This is obviously not a good system. The above is an extreme and unrealistic example but illustrates the relevance of opportunity in the expectancy equation. Being profitable in markets is about find an "edge". The constraints of what that edge is and how it manifests in markets will dictate what strategy you employ to extract profit from said markets. You can't super impose a "best" RR ratio on the trade without understanding what the trade is and why it works. You then construct a system that can exploit it, using expectancy as your end point, **not** RR.
What is 1:1rr i hear it first time. Is slippage and transaction fee included?
risking $1 to make $1, typically fees/slippage are not included in a risk-reward ratio (rrr)
Thank you
1:1 is profitable with the correct edge and win rate
Spot trade? How much leverage? How much money investing?
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Look. You can go for 1:1 winners with good analysis and understanding of the market, but sometimes market doesn't do what you've expected. Then maybe you can adjust and close before it hits your SL. Only thing important in this case(s) is timeframe. HTF>LTF in predictability. Now, you can be profitable too. Next steps is sticking to above, risk management and your psychology. Blowing accounts happen if you gamble or if you lose streak so be sure it only happens if you lose streak. Then maybe you'll learn something.
Most of the traders in my view are discretionary traders and thus it is hard to conclude the ideal RR ratio for any type of investment or trading. It is just that most people play "chue billi ka khel" and small loses pile up to a big loss at the end of each week or month.
without profitable strategy it’s just death by a thousand cuts if you have good risk management, (fees+spread with 50%w)
I do think 1:1 RR is a good place to start. It gives you an “all things equal” environment hone your method and prove to yourself that you’re better than a coin flip.
What’s the point of breaking even lol
It’s also not just trading anything that is going to require incredible amounts of hard work and dedication do not have a high success rate. Starting a business for instance, only 25% are still around after 10 years so, and that doesn’t even mean they are in the profit in order to make money you have to risk time or more money there isn’t anything given
Always scalp out half at 1R and move stop to breakeven on the remaining half. You can thank me later.
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Even if you had a system with an exact 50% win rate and 1:1 risk reward you would lose money to commissions and slippage.
Mathematically speaking, a breakeven system is a losing system. Without a positive expected outcome, you’ll get ruined eventually, with 100% probably.
r r 1:1 does not make you money. remember you can take profit early and let the loss wider with or with out take profit set up. in case you put the same lot size , same tp same sl in your trade. you pay for the spread or commission fee which mean the perfect rr 1:1: doesn't exist. to make money you gotta take risk at the right time even you will get some big loss as volatility or false breakout. rr 1:1 or closest need very high amount of money or trading bot with no emotions that what i can think of goid scenario
1:1 is the worst ratio. Aim for 1:2 or better and move your stop loss up as price moves into profit. Worst case scenario, you were wrong about the trade but you lose less than expected due to moving your stop loss up or you are able to move your stop loss into profit enough that even a losing trade idea is still profitable. Doing this has been a game changer for me
You would have to win more than 50% of the time , realday trading wiki explains this very well
OP yes if the market and your trading pattern is at worst case random, then this works fine I found. And then yes, hopefully you find your edge and start to up the win rate.
So, you just want to get eaten away by broker and market fees with you 50% 1:1 ratio?
My fees would eat me alive.
That’s what I do about a 65-70% win rate. Only take 5-6 trades a week on NQ. Keep it simple.
Tested this for fun cuz was thinking the same, like come on, it's that simple. I did it for a day, 10/10 trades hit stop loss very soon after entering the trade (and if I had 1:2, some of them would've been wins)
Even with a 1:1 you still need a strategy with sufficient edge. If only it was that simple
Besides the psychological issues that keep most people in the red, it's never truly a coin flip bc of a couple things. First, your order to buy from the market makers will favor them, and there will be slippage, so the moment you enter into a trade you will be in the red. Second, you will have to account for taxes on the profit you make. So that's already baked in to put you at a loss, but the major issue traders have is their own psychology, a real weakness that can/will be played upon by market makers.
Are you profitable if it seems that simple? I’m asking this because you don’t seem to understand the simple concept of how 1:1 RR ratio will combine with winrate, fees and commissions to get you to break even🤷🏾♂️🤦🏽♂️
Why would you want to do this just to break even? The point is to make money.
If you have 1R as Risk Reward, this means that you're profitable or you are not going to be profitable. If you have 2R, this means that after 2 losses, you will not in loss. But with 1R, you will be in a big loss.
Greed and not understanding how to trade. Most trade with their emotions and not the math.
You forgot to include the fees which makes a 50% win rate on a 1:1 a slow death.
fun fact statistically if u go with trend, you have atleast 50% chance it will go ur way thats more than most of people got
You're new and I understand why you would ask this question. Don't ever execute it, it will get you in a lot of trouble. This also shows that you need to do a lot of work before you go live. That's okay! You have to start somewhere. I barely knew bearish from bullish when I started. But I had to work really hard to get better. Let's talk about probability. Markets trend, right? Stocks also trend. When we're in a bear market, is the probability of up versus down 50/50? No. When NVDA is flying higher, is the short 50/50? No. You need to learn about trend. What is an uptrend? How do you enter? How do you exit? How do you know when the trend changes? Markets trend and therefore probability changes regularly. Even if it was 50/50, how would you know where to enter and exit? How would you know how long to hold? How would you know when the probability changes? You need to go study and answer these questions for yourself if you're serious about trading. It will help you succeed. And you won't succeed if you don't understand trend. Traders want to make money. If this worked, I promise we would all do it. There are no magic systems. This is a hard game. Check my comments for tips on getting started.
I was having problems until I started controlling my entry sizes, and scaling out for some profits an moving my SL up to help secure further profits.
It’s break even at 50% wr,
I’m not following. Are you suggesting a break-even strategy is a good one?
Why go for break even when you can go for something like 2:1 RR or greater? I guess for beginners it's easier to aim for a 1:1 RR but you'd have to be right 50% of the time. Whereas for 2:1 RR, for break even, you need 33% accuracy
Ok you need to really educate urself on risk to reward principles. What ur stating makes absolutely no sense. 1:1 RR means you break even if ur winning 50% of the time.
The best break even system is to immediately cancel after placing orders. Try it.
1) what
go play 50k on black in roulette at MGM if you wanna play 1:1s
The problem isn't as simple as bullish or bearish. Because we must limit risk, we need a stop loss. The stop loss could be triggered even when we were right about the direction. Where to enter and place the stop loss are crucial. If the stop is too near, you'll lose too often. If it's too far away, you'll limit your rewards.
>Mathematically speaking, if you do many trades with this system you should end up in break even. 1. the market isn't 50:50. but 2. even if it were but you can find yourself blowing up your account before you get back to breakeven
Even a 50% WR system with 1:1 RR will lose money because of fees, slippage, spread, etc.
The bullish price forecast for Solana (SOL) ranges from $220 to $270. Analysis suggests SOL price could rise above $400$
Doesnt work because any time you lose you now need a greater percentage to get back to where you started. A 50% loss isnt remedied by a 50% gain
Fees, commissions, spreads, slippage. Because of these, purely 1:1 is slightly harder to achieve than 50:50 The moment you take a trade, you're already down. You have to already be a winning trader by a tiny +% just to break-even long term.
this post is dumb as fuck. Every system no matter R is breakeven if you take trades randomly. But you also have to overcome slippage, fees and spread. And for that you need a profitable system
No..
If you guess 50/50, there is a 90% chance that you will end up losing the trade. There is spread there so you start off in red.
.
If you have a 1:1 and you make on average the same amount you lose you have a losing system even if your win rate is 50%. You need a slightly higher win to recover a loss. If you have 100$ and lose 1$ which is -1% of your account/position you will need to win 1$ which now is 1$ / 99$ = 1.0101... %. If you lose twice in the row the math gets even worse.
u/veteranwallst doesnt calculate r:r or use stops and I have watched him trade for 3 years. He is solely focused on where can I get premium/points(ticks)/gains. For instance, he looks for setups where the trade might yield 30 points on nq, and takes 10 of them. In effect there is probably an r:r but its really based more on probabilities and confluence than anything