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Originally Posted by TraderABC
If price is random, then it has 50:50 chance of going either way. However where do you think it will touch first, 30 pips away or 300? Thus you cannot say "Oh, I'll set my stop loss at 30 and take profit at 300" . While it is true that your max win to max loss ratio will be 10-1. Your frequency of such wins will be MINISCULE.
It is true that if your profit/loss ratio is 3/1 your wins are much larger. But with 3/1 ratio you will be stopped out 3x as much, thus your mathematical expectency is 0 at best.
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Agree. The lower the win loss ratio, the higher profits per win needed. That was all I was trying to illustrate. With regards to what profit targets is needed to be profitable, I guess in a 50:50 world just 1 pip more than stop loss size.