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Hi pismo...I'd love to know more about why you think the win % would drop if you expect to win more from your winning trades than you expect to lose on the losing trades? |
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I agree with that comment as well. It just make sense to me. If I'm going for 4 pts on the es, the chances of price traveling 4pts w/o my stop being hit ( where ever that may be, thats an entirely different topic
) is a lot less likely to deliver when comparing it to a smaller 2pt profit target.
So its a trade off in my view. A bigger profit objective and lower win % or smaller profit objective with a higher win %. You could have the best RR ratio, but if the reward is hardly hit then what you have a just a theoretical RR ratio since your targets aren't generally hit. So what might start of as a 2 or 3 RR ratio, might just turn out to be a 1 or below by the time the trade is said and done.
Therefore, a trader would need to compare the initial RR ratio with what actually happened. I found that my targets were ambitious. When I put the trade on I was happy since I had a 2 or even 3 RR ratio. But watching price move in my favor and then retracing back so I get 1 or 2 ticks, reality sets in that my actual RR ratio isn't the same as my theoretical or initial RR ratio.
So I brought in my targets, my initial RR ratio is lower, but the targets are being hit more often. In turn, my actual RR ratio is congruent with the initial or theoretical RR ratio.
I thought about RR ratios from a lot of angles. I hope this helps, and not confuses anyone
