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Originally Posted by awcapital
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.
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First, with slippage, price shifting, etc that 1 pip is not enough.
2nd, I probably didn't accent enough risk/reward ratio and random walk enough.
IF risk/reward ratio is 1/1, then in best case you will break even.
if risk/reward 2/1, then your losses are 2x as big and you'll probably get margin call much quicker than big gains. On other hand you'll be winning 2x as often so if you DO get lucky you will break even at best...
If 1/2, then while gaining 2x as much, you will be loosing 2x as much... Thus you will be lucky to break even AGAIN..
With spread, slippage, price shifting, and other events no matter which r/r ratio you choose the result is the same according to random walk.