Need help with Reward Risk Ratio (RRR)

[murray t turtle]

And the same here: he was my original information-source on the hugely important and widely underrated subject of position sizing, and immensely valuable to me, as such. (Later, I "graduated" to Ralph Vince, who was even more useful - and posts here occasionally.)





Indeed ... and for this reason he's not a popular author with people who imagine that they can make money simply by "copying something that just 'works'," but to be fair those readers were never going to become profitable anyway, without a fundamental change of perspective and re-education.





I fully agree.

%%
I like Dr Van Tharp, XEla, for 2 or more reasons.
[1st]I bought another trading book one time , a Chicago trader noted ''i discerned truth in his voice''
[2] Good points of his, in Jack Schwager Top Trader books , which is among the best; long story short................................................................................NOT a prediction.

 

[doggyfx]

Hi doggyfx

Thank you for your reply. Sorry if my explanation was not clear enough. I'll try to explain it again using an example. Let's say I want to short G/U. SL is 57 pips, my TP1 is 57 pips and TP2 is 115. Position size is 0.02. When price goes against me, I'll just let it hit my SL. So when price hits my TP1 I'll close half of my position and the rest at TP2. My question is when price goes to my TP2, is my total reward risk ratio 1.5 : 1 or 2:1?
Thank you.

Oh I see, in order to calculate that just find math expectations of both of your wins and losses.
Assuming price is subject to normal distribution (although in some books it's claimed to resemble more t-distribution), we have 1/2 probability of price going up or down

So for loss: 1/2*57+1/2*0=28.5
For winning trade: 1/2*57+1/4*57=42.75
E(win)/E(loss)=42.75/28.5=1.5

Correct me if I'm wrong.

 

[murray t turtle]

[99%]

It is always said (from Van Tharpe).......

Is this the case in reality? It seems like textbook theory.

I'm sure there must be some people who have high R multiples and high win rates as they may be entering in such a place or time where they can keep their stop loss very close so increasing their R multiple.

Thoughts?

%% Well, New2, good question. The turtles made millions low hit[win% ] rate, lots of leverage,large stops, but BIG % trending markets.....................................................................

I like IBD founder William o Neil' s 250 page -, or updated 455/+ page book-system; risk 3%-8%- maybe gain 25%, stocks-cash markets. As far as people talking about risk 1%;most all those are trading leveraged , or limit UP, limit down markets big difference.Of course he started IBD+ bought a NYSE seat out of his trading profits; i noted yesterday he cut a loss twice on XRX, about 2% when it was almost $100.............................................................. BUT open stocks profits are trailed with stops >> 8%