Besides the math on risk to reward, it's a non issue because you have no control over how much you win. The only thing we have any control over is our risk. And that's the whole point of Mike's discussion here: risk management, not profit management.... Love it.
I'm an automated backtesting freak, and I've come to the same conclusion about R:R. Define your most important metrics (net profit/profit factor/max drawdown/percent profitable) and optimize your strategy for your preferred metrics. There are always compromises in performance among the various metrics.
YES! Finally, someone who has done the ACTUAL math, and knows that R:R and winrate are inversely correlated. It's the biggest load of bs that most traders believe. 1:1, 2:1, 1:2, 10:1... They all break even.
That part about risk of ruin having the 'capital phases' - don't go digging into that second pile until you learn the lessons from the first one. That's real good.
Having a fair stop loss is good but I found sticking to a RR will make you miss out on too many setups and you must adjust to the price action sometimes its obvious your price target wont get hit and you should take profit.
I cant agree more that in Risk Management - expecting too much profits in first few weeks is not right. Focusing on the basics of skills for a good trader is very crucial. I have been with a Broker Market101 and this has helped me a lot. Most of the brokers loose their way due to greed and not taking trading with professional background or proper studies.
Im using martingale since 2010. Biggest problem is risk reward my goal is to reach 1/2 im still doing it successfully whit 1/2 so far i only had to place the the 6 trade in the sequence. I truly believe they are all the same in terms of capital requirements altho whit martingale it really differential. (I know its dangerous And all that its my choice tho)
You know what, if you set SLTP in your trade, sure enough you're trading your Bank's account. Big guys love your SL and sweep it when they enter trade.😊
Some traders frequently eat like a bird and once in a while take a dump like an elephant. Other traders eat like an elephant once in a while and take a dump like a bird here and there.
The only numbers that are important are a consistent win rate and R-value. It’s so clear that on reality very few day traders can consistently deliver a 55% win rate over a 12 month period.
Can you give us some names of the prop firms you are referring to? Most, if not all of these online "prop" shops, topstep, apex and all the rest actually couldn't care less if you ever become a truly professional trader that trades with them. They never really give you any actual cash to trade, you are basically given a very small amount and you have to build your own account. Yes you can make some money and there are some benefits, but pretty much it's all a smoke n mirrors show. Their whole business model is designed to make money off of the fees.
With the election approaching, I’m reflecting on how possible policy changes could affect market growth. The outcome of the election can significantly impact industry performance, introduce market fluctuations, and require updates to your investment plan due to changes in legislation.
You kind of miss the point: let's say you would always take profit at 0.5 instead, and in that case that turns out to happen 70% of the time while only 20% of the times you reach at least 1:1, it would be better to just take the 0.5 each time. On top of that, often you can then re-enter at the exact same price or even a bit lower, to do the same thing 2-3 times in one session.
Great info. I agree on RR Tho i see it as a general guideline to see how my strategy is performing. I remember a trading educator so proud that he stuck to his plan and let a 6 RR trade go to breakeven because his RR target was like 7 or 8 RR.. and it didn't hit. Maybe it works for him but he shouldn't teach that. Another way to look at it. He had a 2:6 RR at some point.
Risk management is getting the winrate right depends on the risk reward you using for the trade you on. You can trade negative risk reward as well if your winrate is above the breakeven and covering the fees. It's a formula that you need to follow which you didn't even mention or learned. Also your risk percent is not fixed its all depends on your risk reward. You need a lot of learning sorry
Besides the math on risk to reward, it's a non issue because you have no control over how much you win. The only thing we have any control over is our risk. And that's the whole point of Mike's discussion here: risk management, not profit management.... Love it.
Very true! Glad you liked it!
I'm an automated backtesting freak, and I've come to the same conclusion about R:R. Define your most important metrics (net profit/profit factor/max drawdown/percent profitable) and optimize your strategy for your preferred metrics. There are always compromises in performance among the various metrics.
Set a sensible stop loss and stick to it, pay yourself when the market allows.
Simple.
This is why I alway let Stop Loss get hit
Etienne Crete Thank you for you channel and you willingness to help other. your channel has been a blessing. very usefull
Always my pleasure!
YES! Finally, someone who has done the ACTUAL math, and knows that R:R and winrate are inversely correlated. It's the biggest load of bs that most traders believe. 1:1, 2:1, 1:2, 10:1... They all break even.
Glad you agree! Thanks for the comment!
That part about risk of ruin having the 'capital phases' - don't go digging into that second pile until you learn the lessons from the first one. That's real good.
Having a fair stop loss is good but I found sticking to a RR will make you miss out on too many setups and you must adjust to the price action sometimes its obvious your price target wont get hit and you should take profit.
That’s a good point too! I’ve entered trades where my stop loss would be really wide and knew my t/p would be hard to hit.
Good points Mike,i prefer saying Reward To Risk,as apposed to Risk To Reward,just personal preference i guess.😊
I will reverse it in an upcoming video in your honor hd!
I don’t like losing so perhaps 1:1 ratio maybe best for me?!?
I cant agree more that in Risk Management - expecting too much profits in first few weeks is not right. Focusing on the basics of skills for a good trader is very crucial. I have been with a Broker Market101 and this has helped me a lot. Most of the brokers loose their way due to greed and not taking trading with professional background or proper studies.
Im using martingale since 2010. Biggest problem is risk reward my goal is to reach 1/2 im still doing it successfully whit 1/2 so far i only had to place the the 6 trade in the sequence. I truly believe they are all the same in terms of capital requirements altho whit martingale it really differential. (I know its dangerous And all that its my choice tho)
Wow, I thought it was just me. Mine is modified a bit but it's still martingale.
It's just maths, and sticking to the formula..
Thank you for this video Etienne. When are you putting this on Spotify?
Good idea! Usually I only post interviews on Spotify/podcast though.
You know what, if you set SLTP in your trade, sure enough you're trading your Bank's account. Big guys love your SL and sweep it when they enter trade.😊
The link in description isntt working unfortunately.
Some traders frequently eat like a bird and once in a while take a dump like an elephant.
Other traders eat like an elephant once in a while and take a dump like a bird here and there.
Nice way of putting it :-)
The only numbers that are important are a consistent win rate and R-value. It’s so clear that on reality very few day traders can consistently deliver a 55% win rate over a 12 month period.
Can you give us some names of the prop firms you are referring to? Most, if not all of these online "prop" shops, topstep, apex and all the rest actually couldn't care less if you ever become a truly professional trader that trades with them. They never really give you any actual cash to trade, you are basically given a very small amount and you have to build your own account. Yes you can make some money and there are some benefits, but pretty much it's all a smoke n mirrors show. Their whole business model is designed to make money off of the fees.
Would you please provide us a list of respectful prop firms where we can apply to trade for them? Thanks in advance
Here are the ones I’ve reviewed or used: ua-cam.com/play/PLwmpbNUnTt6jGKRU9WojpDpeNdnMD2KKv.html&si=zLZN6NrLeIdqtoCp
Thanks E good advice
Any time!
Thanks! Learning lots
Glad to hear it!
With the election approaching, I’m reflecting on how possible policy changes could affect market growth. The outcome of the election can significantly impact industry performance, introduce market fluctuations, and require updates to your investment plan due to changes in legislation.
The elections are bullshit, just trade as normal 😂
The only forex channel I listen too for solid advice. I will be interviewed on here… one day 🏆
I’m glad to hear that! Keep crushing it!
true, very detailed... I have my one Experiece
Thanks Mike, great video.
Glad it was useful!
I just trade what the market gives me. Idc about the R:R aslong as it’s 1:1+
You kind of miss the point: let's say you would always take profit at 0.5 instead, and in that case that turns out to happen 70% of the time while only 20% of the times you reach at least 1:1, it would be better to just take the 0.5 each time. On top of that, often you can then re-enter at the exact same price or even a bit lower, to do the same thing 2-3 times in one session.
@@ReneMedia I hear you but my risk management includes 1 trade a day.
wow this is gr8!
What prop firm are you guys referring to give us some names of the trusted one most of them are shady
These are the prop firms we recommend: ua-cam.com/play/PLwmpbNUnTt6jGKRU9WojpDpeNdnMD2KKv.html
I agree with you
Somehow all my strategies end up with the about the same daily/monthly PnL no matter what I set my targets and stops to.
Great info. I agree on RR
Tho i see it as a general guideline to see how my strategy is performing.
I remember a trading educator so proud that he stuck to his plan and let a 6 RR trade go to breakeven because his RR target was like 7 or 8 RR.. and it didn't hit.
Maybe it works for him but he shouldn't teach that. Another way to look at it. He had a 2:6 RR at some point.
Risk management is getting the winrate right depends on the risk reward you using for the trade you on. You can trade negative risk reward as well if your winrate is above the breakeven and covering the fees. It's a formula that you need to follow which you didn't even mention or learned. Also your risk percent is not fixed its all depends on your risk reward. You need a lot of learning sorry
why would I believe someone who lives in their mom's basement?
She makes an awesome soup. 😄