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Is this even possible? seems like u have to risk 2pts to make just 1 because almost always, the mkt will pull back to get your entires, even MORE SO if u enter on stops.
With 2 point risk, u can stay in a position longer, but if ur Wrong, its a constant battle of moving forward 1 step and backwards 2, thus, a losing game over time.
Seems like 2:2 ratio is better, but then the mkt rarely gives u 2points, so if u take one pt out, u are still risking 2 to make 1.
How are you guys trading 1:1 without getting stopped out immediately? 1:1 for me is almost like donating money.
i think risking 1 to make 2 (1:2) theoretically is good BUT, i feel there is a major Flaw in this mentality.
As a test, i made 20 trades risking 1:2 and ONLY ONE out of 20 hit the 2pt profit target. I mean, that is a 95% failure rate, and the mkt only goes UP or DN...50/50, right?
If its no better than a coin flip, how can you be wrong 19/20 times?
Is there something im missing here? maybe a larger trade sample size? where by the time i have a 100 losers and 10 winners, my account is blown?
The point that is missing is that you MUST have and edge for the trade you are taking other wise you are just gambling. NOTE- if you do not have a high probability setup for every trade you take -- you are a gambler. You must find your edge.
how do u possibly gain an edge against institutions, big money, and deep pockets, etc.? our petty 6 figure accounts are no match with their zillions of dollars.
I think an example of a 1 point edge would be this. Picture a 3 bar reversal pattern, which is a HH, HL then HH,HL, followed by LH,LL. If bar 4 takes out the low, some traders get in immediately. Others are conservative and wait for a retrace back towards that highest high. If it truely is a reversal getting in 1 point from the top with a stop above that high, should give you a 1:1 higher than normal probability. To me if it goes back below that low 1:3, 1:4.
Billy
PS Holding for that 1:3 is what I need to work on...especially on the ES. You are correct on the up/down 1 then 2 point movement.
I don't think this is a good test. If the results were accurate, you would enter the opposite direction and have a 95% winning strategy with a 2:1 risk/reward, still very profitable.
1] Poll: DO you believe that trading the exact opposite way they are trading would turn the 90% losing traders into winners? ie instead of going long, short, and vice-versa.
2] Would it seem that the best way to trade would be to …
If u talk about 1:1 and consider the market is random, without commission, on a long series, 20 are statistical insignificant, u have the 50% of probabilities to be right. Said that if u risk/reward is 1:2 the probailities are reduced by another 50%, so u can be right 25% of times. Said that I think market is not random, otherwise u can't develop an edge and on the long run trading would be a losing game, cos there are commission and tax etc.
Then if u go in the market with a random strategy, considering u haven't the capital to 'flip the coin' many time to reach 50% to be right, in a short term u have the same probabilities to win or loose, but then anyway u will loose due to the commission and tax etc.
Who said we need to go against them? With their size, they cannot go in and out we small traders do. They have to buy/sell in a incremental basis. That's it, once they started their buying/selling, they cannot stop until they are filled with their order as the best possible price. We, as a small trader, we will buy/sell after they started their buying/sell. This usually present a few opportunities and this is our edge.