Probability in Trading

[Probability in Trading]

If I where playing a game where someone flips a coin and I have to guess which side it lands on, what are my odds of me being right? 50% right?

 

If I use the coin flip to make a trade(heads go long, tails go short) it is still 50% chance of being right. But I believe this is true if the TP and SL are equal distance from the entry.(TP=2 and SL=2)

 

The question is, If I now increase stop to 3 and keep TP and 2, is there a higher probability of it hitting my TP since it is closer?

 

Thanks.

 

 

If you do have an inverse Risk-Reward mechanism, then it's imperative that you must have a really hign winning percantage trading strategy, greater than 82%. Normally, to achieve that result, the strategy aims for small to medium profits.

 

Otherwise, It's generally hard to achieve 'Positive Expectancy' results when aiming for large profit and aiming for high winning percentage at the same time due to inherent risk of losing all fund.