MoneyTec Traders Community Forum - View Single Post - Why we are taught to set risk/reward ratio larger than 1

rezo_s · 21-10-2003, 19:15

Dear Blusky,

So you say one should follow all the signals regardless the r:r ratio?
Dont get me wrong, I just want to understand what is the final point. As far as I understand, you say that if the trade is with the trend and you feel good about the trade potential, your wiggle tolerance is greater, and on shorter term traders its less; i.e. if you are with the trend, you have larger stops n targets and with shorter term trades you set tighter parameters? But still the point is that risk and reward (at least aproximetly) should be estimeted...stop should be set - that is for sure, right?

So the final point is that we should estimate this ratio before trades, and we should keep eye on it to be >1....or not?
May be I missunderstood something here, or did I get you right?

Regards,

21-10-2003, 19:15	#10
rezo_s level 3 Join Date: May 2003 Posts: 2,467 Downloads: 0 Uploads: 0 Rep Power: 0	Hello Blusky Dear Blusky, So you say one should follow all the signals regardless the r:r ratio? Dont get me wrong, I just want to understand what is the final point. As far as I understand, you say that if the trade is with the trend and you feel good about the trade potential, your wiggle tolerance is greater, and on shorter term traders its less; i.e. if you are with the trend, you have larger stops n targets and with shorter term trades you set tighter parameters? But still the point is that risk and reward (at least aproximetly) should be estimeted...stop should be set - that is for sure, right? So the final point is that we should estimate this ratio before trades, and we should keep eye on it to be >1....or not? May be I missunderstood something here, or did I get you right? Regards, Last edited by rezo_s : 21-10-2003 at 19:22.