Define ROI before Trade?

SimpleMeLike

SimpleMeLike

Hello,

I am backtesting strategy with ES trading.

Do you calculate your risk (points loss) vs reward (points earned) before you place a trade?

Any other words do you calculate ROI (R:R) before you place the order?

I want to make sure I am right track with my strategy by making sure I have R:R of +2 before taking trades. This way I make sure my price entry, stop loss price, and target will reward me with at least +100% ROI (or R:R of +2)

Am I on the right track as far risk management per trade? I believe I am, and this keeps me from chasing in case I don't get the entry I original planned at 100% ROI.

Thank you for any input.
 
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Every trade I make must have a reward that is at least 2-3x the risk else Im not interested.

Ideally 5x, its the best way to beat losing streaks, comm and lower accuracy.
 
I am completely opposite as I am scalper, risk always greater than reward, so you better not lose often, risk 3pt in hopes to make 2pt. But the 3pt is more like a catastrophic area. We are all different.
 
Agree with both commenters. I guess you'd better choose what fits your strategy best. As of ROI, I believe for the best choice you should always calculate it first.
 
Thank you all for the reply.

Yes, I agree. Calculating the risk first let's me manage my own trade and pick my stop loss price better.
 
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