Winston Reed replies to: Trading Myths and Some Forex Math

The problem with using R/R (reward/risk BTW when expressing it as 2/1, 3/1, 4/1 etc) is that price doesn’t know or care where any one individual trader’s stop loss, trailing stop or profit target is. Profit targets are determined by what price does obviously, not where a line on a chart is placed.

Its all well and good to shot for a 2/1, 3/1, 4/1 ratio but what it really comes down to is to have price go the direction you expect it to – for as long as possible. How far is anyone’s guess. If it hits a target good. If it doesn’t so what, and what a trailing stop is for.

“Guess” right enough times direction and stop placement you’ll come out ahead.

Now as for squiggly line moving averages, don’t get me started.

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