Brother Chuan’s 10-Year Trading Journey: Hidden Lessons on Why You Should Do High Risk-to-Reward Trades??
Friends in crypto first need to understand clearly: high win rate ≠ stable profitability. Even if your win rate is 80%, if you take small profits and cut losses that end up being big losses, then even 80 successful trades won’t be able to make up for the 20 losing trades. The end result is still losing money.
For example, when the risk-to-reward ratio is 2, it’s not hard to calculate that your win rate only needs to be 33.3% to achieve stable returns. But when the risk-to-reward ratio is 0.5, your win rate must be greater than 66.7% in order to make money—at which point making profits becomes extremely difficult.
As long as the risk-to-reward ratio is poor, you’ll need a particularly high win rate to compensate. In real trading, it’s very hard to continuously maintain a high win rate (of course, except for hindsight traders in the market).
The market is noisy. Don’t rely on impulse to follow blindly—take a closer look at his risk-to-reward ratio and position risk control. This is the key to helping you get out of your predicament.
$BTC $ETH #
Friends in crypto first need to understand clearly: high win rate ≠ stable profitability. Even if your win rate is 80%, if you take small profits and cut losses that end up being big losses, then even 80 successful trades won’t be able to make up for the 20 losing trades. The end result is still losing money.
For example, when the risk-to-reward ratio is 2, it’s not hard to calculate that your win rate only needs to be 33.3% to achieve stable returns. But when the risk-to-reward ratio is 0.5, your win rate must be greater than 66.7% in order to make money—at which point making profits becomes extremely difficult.
As long as the risk-to-reward ratio is poor, you’ll need a particularly high win rate to compensate. In real trading, it’s very hard to continuously maintain a high win rate (of course, except for hindsight traders in the market).
The market is noisy. Don’t rely on impulse to follow blindly—take a closer look at his risk-to-reward ratio and position risk control. This is the key to helping you get out of your predicament.
$BTC $ETH #
