Most traders blow winning trades by holding out for bigger targets. Here's the math on when to actually hold vs. when you're just gambling.
The Setup:
You're up. Price is moving your way. You could take profit now... but what if it goes higher?
So you hold.
Price reverses. You watch your winner turn into a loser.
Sound familiar?
The Real Question:
A 3R target sounds better than 1R. But does it actually make you more money?
Here's what most traders miss:
Every trade that hits 3R must pass through 1R first. But most trades that hit 1R never make it to 3R.
Bigger target = lower win rate.
The question isn't "which sounds better" — it's whether your extra winners cover your new losses.
The Framework:
1. Check Your Hypothesis
Don't aim for the next key level just because it exists.
Example: You're shorting resistance in a range. Your thesis says price returns to the mean.
Targeting the mean? Makes sense.
Targeting support at the bottom? Now you're betting on TWO things:
- Price returns to mean
- Sellers push through to support
Your original idea only supports the first move. Unless you have evidence for the second, you're hoping.
2. Run The Numbers
Go back through 50+ trades. Same entry, same stop. Check how many would've hit:
- 1R: 60%
- 2R: 35%
- 3R: 20%
Now calculate expected value:
1R target: (0.60 × 1R) - (0.40 × 1R) = +0.20R per trade
2R target: (0.35 × 2R) - (0.65 × 1R) = +0.05R per trade
3R target: (0.20 × 3R) - (0.80 × 1R) = -0.20R per trade
In this example, 1R wins. Your data might differ — but you need to know YOUR numbers.
3. Test Gradually
If your data supports going bigger, test 1.5R before jumping to 3R.
Collect at least 30 trades. Track everything. Compare expected value.
The Truth:
You don't need to catch every move to print. You need a target that your setup actually supports — and that your data proves works.
Stop aiming for Instagram screenshots. Start aiming for what actually compounds your account.
The Setup:
You're up. Price is moving your way. You could take profit now... but what if it goes higher?
So you hold.
Price reverses. You watch your winner turn into a loser.
Sound familiar?
The Real Question:
A 3R target sounds better than 1R. But does it actually make you more money?
Here's what most traders miss:
Every trade that hits 3R must pass through 1R first. But most trades that hit 1R never make it to 3R.
Bigger target = lower win rate.
The question isn't "which sounds better" — it's whether your extra winners cover your new losses.
The Framework:
1. Check Your Hypothesis
Don't aim for the next key level just because it exists.
Example: You're shorting resistance in a range. Your thesis says price returns to the mean.
Targeting the mean? Makes sense.
Targeting support at the bottom? Now you're betting on TWO things:
- Price returns to mean
- Sellers push through to support
Your original idea only supports the first move. Unless you have evidence for the second, you're hoping.
2. Run The Numbers
Go back through 50+ trades. Same entry, same stop. Check how many would've hit:
- 1R: 60%
- 2R: 35%
- 3R: 20%
Now calculate expected value:
1R target: (0.60 × 1R) - (0.40 × 1R) = +0.20R per trade
2R target: (0.35 × 2R) - (0.65 × 1R) = +0.05R per trade
3R target: (0.20 × 3R) - (0.80 × 1R) = -0.20R per trade
In this example, 1R wins. Your data might differ — but you need to know YOUR numbers.
3. Test Gradually
If your data supports going bigger, test 1.5R before jumping to 3R.
Collect at least 30 trades. Track everything. Compare expected value.
The Truth:
You don't need to catch every move to print. You need a target that your setup actually supports — and that your data proves works.
Stop aiming for Instagram screenshots. Start aiming for what actually compounds your account.