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good profit to risk trading strategy?
5 Answers
<p>Your trades must strike a balance between win rate and risk/reward. A high win rate means nothing if the risk/reward is very high, and a great risk/reward ratio may mean nothing if the win rate is very low.</p>
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<p>Keep your risk/reward below 1.0; that way, even if you have an off day, winning only 40% of your trades, you can likely still pull off a daily profit.</p>
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<p>Your ideal mix will depend on your trading style. Keep in mind that you don't need a very high win rate or a super-low risk/reward ratio to be successful.</p>
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<p>Strive to make a bit more on winners than you lose on losers; ideally, wins should be about 1.5 times greater than risk—if risking $0.10 try to make at least $0.15. This risk/reward ratio is 0.67.</p>
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<p id="isPasted">A solid profit-to-risk trading strategy relies on a favorable risk-reward ratio, disciplined risk management, and sound trade selection. A common benchmark is to only take trades with a risk-reward ratio of at least 1:2, meaning for every one unit of currency you risk, you stand to gain at least two units. This allows a trader to remain profitable over time even with a lower win rate. </p><p id="isPasted"><strong>Combine risk-reward with win rate</strong></p><p>The risk-reward ratio and win rate work together to determine long-term profitability. With a higher risk-reward ratio (e.g., 3:1), you can still be profitable with a lower win rate …</p>
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