The support forum is built with (1) a Q&A format for common trading queries received from wannabe and experienced traders, and (2) a standard forum for course video topics. How to Trade Price Action and How to Trade Forex Price Action videos are consolidated into common forums.
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Topic starter
04/01/2021 8:52 pm
Hi, love the course, but this one is stumping me. Obviously we want to make more than 2x actual risk on a trade, but Al says the math is good to take it if we want. How is this possible if the larger initial risk stop will sometimes be hit? At 60% loss rate, wouldn’t that practice doom an account?
Will liked
06/01/2021 11:59 am
If you lose 60% of the time your full initial risk and factor in commissions and mistakes, you will most likely lose money if you just get 2AR in your winners. Yet, actually, this is not what happens: in those 60% that you don't reach 2AR you get some stops hit, yes, but also some small losers (you exit before your stop gets hit) and some small winners (you exit with a few ticks because the MKT is not doing what is expected).
The small wins are cancelled out with the small losses and your full-blown stop losers are more than offsetted with the 40% of times that your winners will reach 2AR or more.
In real trading, you many times get much more than 2AR in a swing trade so, even if your stop gets hit often, you should be Ok if you squeeze all the profit from your winners.
