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buddyanton

If my profit/loss ratio is less than 2:1, is there more consideration to make

over 2 years ago

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ForexNinja

One important consideration I do when setting profit/loss ratio is time frame. For instance, in intraday trades I sometimes have a ratio that is lower than 1:1 because I realize that I could get stopped out by simple noise/fluctuations in price. On the other hand, I can go for something as high as a 3:1 profit/loss ratio on swing trades (trades that span more than a day) because I have a wider stop, allowing my trade to fully develop without getting stopped by random noise/ price fluctuations caused by news.

over 2 years ago

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Ttaolin

I found it hard to digest your question.maybe you should ask the question again with a little bit of explaination

over 2 years ago

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Cyclopip

I think your question may be lacking, but I'll try to answer it anyway. It is okay to have a profit / loss ratio that it less than 2:1 as long as you remain highly profitable. As long as it is above 1:1, you should be okay. Most people recommend having ratios bigger than 1:1 because even if you are profitable on just half of your trades, you will end up on top in the long run.

over 2 years ago

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ForexGump

Of course you would want to gain more compared to what you are risking so ideally having a profit-to-loss ratio of more than 1 is to 1 is ideal.

over 2 years ago

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FirePips

Profit / Loss ratio of 2:1 is only the beginning. what else you need to consider is the overall profitability of the system.

Say you are system is profitable 50% of the time, which means that for every $100 you will lose $50 (2:1). However if you system is less than 50% successful then you run into risk of losing money, since you number of losses would be higher.

The best way to find out if the system is profitable or not is to take at least 50 consecutive trades generated by the system and then working out overall profitability.

Another important point you may want to consider is Money Management. You can read more here http://forex.firepips.com/2008/10/2...

over 2 years ago

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