Hi,

I wanna talk about something that I've noticed, and never read it in any book, or any trading forum, and never heard any trader talking about this, and to me, personally, I think is the main reason why trading is so damn hard, and also is the reason why a newbie trader has absolutely no chance to win at trading, no matter how luck you are at the beginning


Basically we all have heard the advice that your take profit should be ideally a lot more than your risk, let's say 2:1 because then you will only have to win 33% of your trades to be profitable, or 3:1 because then you would have to win 25% to be profitable etc etc and so on , or try any number under the simple formula : risk/(risk +reward) and you will get the minimum percentage of trades that you should win in the long run to be profitable (minus trading fees of course )

this advice that sounds so beautiful apparently , gives raise to what I like to call, the risk:reward paradox
it consist basically , in that whenever your R:R is more than 1 and you are wrong, if you would have done exactly the opposite you could be wrong too!


let's see some example


in picture 1, you buy EUR/USD @ 1,3000, your stop loss is 20 pips and your take profit is 50 pips, you only have to be right about 29% of the time to be profitable in the long run, great!!. at the end your stop loss is hit , and then price go up, you think this is really bad luck, and yes, sometimes it is.....












in picture 2 the price action is exactly the same, but you decide to do the exact opposite, now you sell EUR/USD @1,3000 and your SL is the same 20 pips, and your take profit the same 50 pips













so no matter if you buy or sell, you are wrong in both cases!!!!,

and this is what happens every week, every day, every hour in the graphs , and to me this is the main reason why so many people lose money at trading

this mean than your risk:reward should be 1:1 or even less?? well, not exactly , I guess best advice is let your profit runs when you see things very clear

PD: ( sorry if bad writing , English is not my main language ... )


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