Why a Good Risk to Reward Trade Can Cause You to Lose Money in the Long Run

[@CarlosJimenez-oo6ge]

I agree. We should be playing a game with positive expectancy. However, the asymmetrical R/R ratio is a necessary component of trading success. Jerry Parker said it best, "Trading pros who profit and survive are committed, or I say obsessed with asymmetrical risk-reward”.

[@lionking20101000]

You told the truth in consolidation markets which most of times i mean 70 percent of the time market does not give us even 1 to 1 rr .

[@sari-saritopic9567]

I definitely agree to him......most of the time my analysis is 95 percent correct but always didn't hit my take profit because of my 1:12 risk reward ratio when but I have noticed recently that the price is always goes to 1:1 ratio.....why i don get the profit on 1:1 ratio instead of lossing my trade

[@rockefeller13]

Right

[@amaantalpur2932]

Risk to reward should be 1:1 with 60% winning rate. 1:2 r2r with winning rate of 40%.. Then you'll be succesfull.

[@emmanuelkongnyuy773]

Your right am trading only break and retest patern on H1 i risk 30pips to make 35pips and the winrate is 70%. I think using 1:1 is nice when your winrate is above 50% .it also reduced emotions of seeing trade push on your favour and pulback back to take you out because your trying to respect 1:2 risk reward ratio

[@yaheroyamero7066]

@@emmanuelkongnyuy773 is 1:1 the best ?

[@yaheroyamero7066]

Is 1:1 the best ? What you mean with 60% can you make a example

[@misspriyankayadav]

1:2 is best with 60% accuracy

[@prakashMishraz]

1:50 -2% ( holdings only) 1:10 -9%(intraday with small SL, swing or hold) 1: 5- 17% (intraday with small SL, swing or hold) 1:3- 25%(intraday) 1:2 - 33%( intraday) one should be correct with 33% of his positions to be in no profit no Loss. Calculating size of stock Risking 1% of capital Account size = 100,000 1%= 1000 SL ( let's say= 2) Size of stock( no. Of shares)= 1000/2= 500 Preferable to keep less than 1% in risk so one can buy 80% of this size( 80% of 500= 400 shares) After this check trend and your confidence... Then take 10 positions of 40 shares each And watch the magic. For getting stop loss length use Average true range points + some more...or take position on third green candle after days low. Position should be in the direction of previous trend ... If chart shows it is making higher lows... One will buy at dips... Don't worry you don't need to chase dip or assume... U should wait for a dip and wait of 2nd green candle It forms finger like structure line middle finger will be longest ( pivot) then buy in between index finger but in the 2 and candle not in first candle after middle finger... Keep sl below mid finger....wait and watch taking 10 positions.

[@sandeepmehrotra5462]

Absolutely right. Bilkul Sahi

[@checkoverstripes1464]

As a wyckoff smart money trader, I found RR is everything and of course winrate of 40% is nore than enough

[@nuts285]

Eye opener video! I never thought like this!

[@dalefxclub]

2:1 is always a hit for me even with 50% win-rate, I make money. So that will be cool. The Thing is, you also need to qualify a set-up if it is really doable to give you whatever RRR you use. Say for example, of you use 2:1, and let's say the target profit of 2R needs the market to move 100 pips on your favor, dont take a trend that compromises that movement. Always trade in the direction of "LEAST RESISTANCE" so that you can have a large chance that market will hit your preplanned target according to your Risk Reward. And BTW, 5:1 is not realistic, who uses it by the way??

[@lonesurvivor815]

Paul Tudor Jones uses it. but I agree with you about the 1:2

[@eliasportner4949]

8:1 is super realistic

[@anthonyliew2587]

Thanks Rayner. every training video i watched are indeed very concise and helps beginners a great deal..

[@amaantalpur2932]

Finding a 90% winning system is difficult as well and working on a 10% winning system is insane. Your example is not realistic. R2r should be 1:2 with 40% winning rate.

[@LifeOfJowl]

just like trading profitable isnt realistic but here you are

[@dee23gaming]

Not realistic at all.

[@vipulgoyal954]

Hi reynar, I am using similar options high risk low reward with90%percent winning accuracy. However like 1loss out of 9win offsets my profit. I usually do the shorting stocks which are moving high for a minor retracement and cover my position

[@victor_of_forex]

This is the only truth on Risk To Reward video on youtube thank you so much @RaynerTeo.

[@slay4256]

thank you! Hope to see more video from you :)

[@pradeepshet8350]

I feel Apart from risk to reward and winning rate we also need to see order of occurrence of winning and losing trades.

[@getlucky8952]

A good risk-to-reward ratio alone doesn't guarantee success; it's just one factor. If your winning trades are consistently smaller than your losing trades, or if you have a low win rate despite a favorable ratio, it can lead to net losses over time. Effective risk management, strategy development, and market analysis are crucial for long-term success in trading.

[@siskalee1426]

Clear explanation about s&r. really helpful in learning forex. thanks Rayner.

[@ETTVOFFICIAL_]

I needed this so badly

[@paulbrown5839]

The way i see it, you observe your RR ratio in your backtest. Once you know it, say 1:2 , then you take profit based on 1:2, so if i bet 100, then once i see 200 profit i close the trade .. since backtest says more than that is probably going to hurt me by a reversal.

[@chandrashekharchandvale9375]

Thx for your graphic illustration. Please advise>>>> If I want only 0.03$ target per trade ( 0.2 Profit+0.01 Commissions) then what should be the Risk and Reward Ratio I should follow? I have tried Stop loss at 0.15 in trade but many times the stop loss was hit and after some time my target of 0.03$ also achieved. So how to go ahead with this so that stop loss not hit and minimal profit also achieved.

[@deborahkapapa505]

When you see the market heading in your direction move your stop loss to break even lol, how will you lose 9 times out of 10 when you are always moving your stop loss to break even

[@Lonwolf.]

😂 gonna have 9 broke even trades when five of those trades probably would’ve hit your TP if you left stop loss where it is.

[@fundvantage]

thx for your video, are you located in HK?

[@fundvantage]

+Rayner Teo tks for sharing all your trading ideas again, i've been learning quite a lot from you , cheers!

[@onuchukwugodswill8954]

That's they say 90% of traders loose money because they looking for 1:9 rr😂😂 they want to win 0.5% of the time to stay profitable thats very lazy imo i've tried it for my first 2 years it never worked until i switched

[@naumchejanevski2375]

5 to 1 is exaggerated,realistic is 2 to 1

[@dcftvd]

I've been getting 5 to 1, unfortunately I'm only being able to get a 30% lately...

[@TravelingWithKiwi]

It is actually possible with position trading

[@sangeetharajanm2440]

I think you will be loosing trader that is why you are eager to teach this kind of stuffs.. Stupid if you don't risk how much you read going to loss in every trade then you r not good business man.. It is necessary to fix your risk per trade

[@darryltawembe3838]

Mathematically it’s true. But in reality it’s easier to have a strategy with a high risk reward than a high win rate of 90%. The market is not our market. I don’t like how to support your argument you took a bad example. With a 1:5rr and 20% win rate strategy you are profitable.

[@vipulgoyal954]

Kindly suggest how to reduce the loss size.

[@marcelruzicka9000]

I think that you are very bad in math, sir. Because if your RRR is 1:5, you can expect a 20% target hit. That are 2 profitable trades out of 10, that means profit of 10 dollars. On the other side your loses are 80% out of 10. That means loss of 8 dollars. Now calculate the profit of 10 bucks against the loss of 8 bucks.

[@jment34]

You are incorrect 5 to 1 equals 1/6 wich is 17 percent minimum winrate needed to show a long term profit.

[@onuchukwugodswill8954]

I'm sorry to break your heart but you can't expect anything in the reality of trading being mechanical about the market is the worst way of approach. 1:5 RR is like making an unrealistic investment you'll slowly blow your account pls don't do it it only works when human meet aliens any strategy your looking for should focus on increasing your win rate not reducing it

[@dee23gaming]

​​@@onuchukwugodswill8954 That is why I do the complete opposite. So instead of blowing my account by a thousand paper cuts trying to search for setups and demand 5R out of the market, I literally just enter with the general trend with a negative 5:1 ratio. So instead of my account facing losing streaks, I'll actually face more winning streaks. Because markets like to chop around in unpredictable ways, it actually puts the edge in favour of a negative risk-to-reward, because instead of becoming a victim to randomness, you use it as a weapon. It becomes your strength. And if the markets are trending, you simply follow the trend. So already, this makes positive ratios look like absolute crap.

[@letsrock4943]

Amazing

[@Eli-gg9zd]

This is a great mathematical example but terrible advice. A good trading strategy can make a high RR/low win rate far more profitable than it could ever be the other way around. For starters you’re assuming that a 90% win rate is an obvious and easy thing to achieve. Now we’re not that stupid are we, or maybe you think we are? It’s as if you’re trying to set traders up for a trap which makes me question how legitimate you actually are. I should report you.

[@mutebiemmanuel1425]

No brother, he meant having a strategy that you have backtested for months and that whenever such a strategic plan shows up on the charts it hits ur TP atleast 60 percent of the time and you take it on mechanically, and believe me there are strategies in forex that even give 90 percent accuracy, just dig deeper, stop abusing experienced people like rayner