Currently my take profits vs stop loss are approximately 1:1, it is set according to market structure which happens to often be approximately 1:1. I get a pretty decent win rate with this (easily over 80%), however whenever I try to optimize it or "let winners run" it turns to shit, I probably get way less than 50% win rate with this. I trade with the trend, but not the trend (if that makes sense), I don't try to follow and ride the trend, that fucks me up somehow. Attached is somewhat a basic idea of how I trade. (When I say basic idea, it is VERY basic) Entries are at red lines (with first 3 longs, the rest shorts). Take profits are at the previous highs/lows after entry, therefore I don't really ride the trend but still use the trend as "confluence", the risk:reward isn't good because of this. How do you guys recommend to optimize? Definitely a higher RR ratio would be preferred. I have thought of using different sessions as movers/new highs or lows during NY/London, or using news as a catalyst for a new high/low, however didn't find anything useful. What do you guys think? I also find that if the candle is unable to break the previous high/low with the wick trying to breakout then closing below the previous high/low, it's some indication that I should be ready to take profits. (which is what I currently do), if not I'll just let the trade run. There's another method I use to take profits and often gives me a 1;1 as well, it's pretty accurate too, so the problem might be which setups I should take not how to know which setups to run them with the trend. I can get pretty good entries as well, (price often reverses at most few pips against me after I enter, so I'm able to tighten my stop loss). Or I should just start with a small stop loss since I'm able to get a good entry often? This is something I don't really want to do because as I trade FX, I'm sure there tends to be "noise", or spikes, or such during the day, since I already trade H1 time frame and below, I don't want to be taken out of the trade easily. If some of the more senior traders could give me some ideas or advice that would be perfect. I having a feeling that I have to think more of a market structure approach, things on the chart that show whether the trend will continue or not, but unsure how to move forward.
I've recently had this issue, got used to the YM running 100+++ pts in no time, started letting everything run, which with a 15SL on YM = in profit approx 15 then low range takes out the SL pretty quickly, it's just cause Market is ranged mostly into the Summer Slow entirely chop period. Got to set the TP to market conditions R:R wise, 1:1 here fine, 6 weeks back 1:5 was working great.
If you’re truly getting over 80% win rate with 1:1 static bets you’d be a fool to waste time tinkering with parameters. That kind of expectancy on day trades should get you to capacity limits in no time. If you’re like most small retails though, it’s far more likely there’s a problem with your data collection (bad records, sample size, etc). Unless you’re a rare prodigy, chart patterns will leave you spinning your wheels for as long as you play in that pond. Short-term illusory success that can never quite be sustained long enough to do some actual compounding. I haven’t read much of Turvey’s posts but he seems like a good example of what I’m talking about. If you actually want to build some capital up you need to learn what things the market actually compensates and build strategy around that.
your win rate of 90% seems to be rather bad (too high). can't comment much as I don't know what sort of traders you are (heavy scalping day trading, light scalping day trading ... ), what instruments you are trading, your entry price, quantity and time, your exit price, quantity and time. Not everytime, not every instruments are tradable. Take for example yesterday. Those who traded bonds and perhaps crude oil should be very happy. Those who traded currencies, indices, commodities might be weeping and gnashing their teeth.
There is an indirect relationship between the avg winning pct and the avg reward / avg risk. A stable winning system at a reward to risk ratio of 1:1 is going to converge to around 70%. At an avg 80% winners, now you're having to risk 2x the reward. At 90%, you're at 3x+ risk vs the reward. Trend trading system can easily be 40-60% winners with 1.5:1 to 2.5:1 range of avg reward to risk ratio.
yep.... no doubt......risk depends on structure and where the market is in the cycle and if this sounds vague.....it is because it cannot be explained in a line or a paragraph: have you ever seen a book that is a one line long or a page. most persons who come here to ET want a solution one line long and i can give you a solution one line long ... but you are not going to like the solution: the solution is study for at least 5-8 years, graduate and then get another 3-7 years practical experience... suggest you start now.
and if you thinking what should i study it does not matter. you have to learn all the rubbish first. and then clean up your mind and start a fresh. mind cleaning has to be done by you and you alone...