Live Forex Room Trade – GBP/USD Short – August 19th 2014
Last week during one of our live NY trading room sessions I took a short on the GBP/USD. This trade stopped me out rather quickly for a 12 pip loss but it illustrates a quality stop run setup. I talk a lot about risk/reward ratios and their importance in this training video. One of the most important lessons I learned as a trader was how much more important risk/reward is as compared to your win/loss ratio. Does that mean we just randomly place trades with a 2 to 1 R/R and hope it works out. Obviously the answer is no. The key is learning to identify high Risk/Reward trade setups.
I’ve said time and time again I don’t have an extreme high win/loss ratio and that is the way I prefer it. Why? To illustrate imagine two scenarios. One trader wins 70% of the time with a 1/1 R/R ratio, and another traders wins 50% of the time with a 2/1 R/R ratio. What track record would you prefer? Most traders immediately sway towards the higher win rate but the math doesn’t lie. The trader winning 50% of the time is actually more profitable by a wide margin! The math proves its far more profitable, but I would also argue its much easier to achieve and maintain.
If your struggling to produce consistent results I would urge you to focus more on a trading strategy that is focused around high R/R trade setups. If you want to learn how to take high R/R trades by tracking smart money you can check out our Bank Trading Course Here.
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