Day Trading Forex Live – Advanced Forex Bank Trading Strategies

Part 1 – Habits Of Successful Forex Traders: Risk / Reward

May 31
06:42 2012

While every successful trader has his or her own way of being consistently profitable, there are a few “common denominators” that all profitable traders follow without exception. Chad and I have a combined 17 years of experience in this market, with 8 of those years spent teaching others our forex trading strategies. As you might imagine we have met many traders along the way. As Chad and I discussed this forex training article series we thought of the different common denominators all successful traders we know follow. In part 1 of this training series, we will break down risk/reward and discuss its importance if you are to ever profit from the forex market.

Why Is Risk/Reward Critical?

Forex trading by its very nature is a game of statistics and probabilities. Profitability is the combination of a win to loss ratio vs. the risk/reward of those trades taken. Simply put one can be profitable in ONLY two ways. First you can maintain a high winning percentage, or second, you can maintain a high risk/reward (R/R) ratio. What though is the common denominator between profitable traders? Without a doubt, the answer is risk vs. reward. Those who strive after a win/loss ratio of 80-90% almost always do so at the expense of the R/R ratio, and this is a dangerous trade-off.

The best way to illustrate the importance of R/R is to show a real-life example of it. Below is roughly a month and a half of Chad’s track record. Let’s break down the numbers…

Winning Trades – 18 (53%)

Losing Trades – 17 (47%)

Average Profit – $1,704

Average Loss – $606

Overall R/R – 2.8/1

Overall Profit – $20,414.33

Does this begin to make clear why R/R is so critical if you are to ever become a successful forex trader? Contrary to the lie many tell….most profitable forex traders win between 60-70% of their trades based on our experience over the years. Over the last month and a half Chad has managed a to turn a profit on 53% of his trades. Would you consider that track record a success? Without a doubt, the win/loss ratio is lower than both Chad and I usually average but this so perfectly illustrates the power of the bank trading strategy and its ability to present high R/R trade setups.

Breaking Down The Numbers…

While 4 standard lots is not a huge lot size, most reading this will be trading with an account that is smaller and thus is using smaller lots sizes per trade. To illustrate the power of R/R lets break down the numbers using an account size of $2,000. If you risk 2% per trade that would be $40 risk per trade you take. Thus if you keep the 2.8 to 1 R/R as shown above you would profit $112 on each winning trade. Let’s see how this breaks down using the number of trades in the track record above…

18 Winning Trades – $2016    (18 trades X $112 profit per trade)

17 Losing Trades – $680    (17 trades X $40 risk per trade)

Total Profit – $1336 or +66.8% gain

Using the R/R in the track record listed above you could win as little as 30% of the time and still make money! Hands down if your losing money in the forex market it is almost certainly because you have a poor R/R per trade. I strongly urge you to go back through your last 50-100 trades and determine your overall R/R ratio. How then does one increase their R/R properly?

High Risk/Reward Day Trading Strategies

At this point, I’m sure you can see the value and importance of maintaining a high R/R in your trading. At the heart of the track record listed above is the forex bank trading strategies. The concept is really quite simple. When the banks enter a trade they do not do so to make a 5, 10, or even 20 pip profit. As we have discussed before because they enter positions over time it takes larger moves in order to exit those accumulated positions. Because of this when a trader has truly identified a high probability bank trading setup the market is usually in for at least a 90 pip move.

Trade setups such as the stop run reversal for example, often allow for -20 pip stop losses….thus a 2 to 1 R/R on these day trades is normally achievable. Additionally trading with the smart money trend generally gives high R/R setups. The key is understanding how the banks move the forex market and taking those high probability setups when at least a 2 to 1 R/R is probable. Doing so is the key to profits like those seen in above!


REMINDER: For the rest of the month you can get the Bank Trading Course, Live Training Room, Members Forum, Daily Market Previews, and Lifetime Support at a 35% discount by Clicking Here.

If You Enjoyed the Article Then Click The Like Buttons Below or Tweet It !!


Warning: count(): Parameter must be an array or an object that implements Countable in /home/wwwdaytr/public_html/wp-content/themes/legatus-theme/includes/single/post-tags.php on line 5

Related Articles


  1. 4X
    4X June 01, 04:06


    Thanks for opening my eyes once again of the importance of using a good R/R

    Reply to this comment
  2. Russ
    Russ June 01, 11:12

    Sometimes it takes a new trader a while to accept and realize that the ratio of pips stop loss to pips take profit is really more important and easier to control than your winnig % of trades.

    Many focus on higer win rate and take less pips only to realize they still are losing every month where you can have 10 losing trades of 20 pips each and 7 winning trades of 40 pips each and build your account nicely only winning 41 % of your trades 200 pips loss 280 won for a 80 pip profit

    Reply to this comment
  3. tdhhouck
    tdhhouck June 01, 15:26

    I think that this is great! I only have one question, are the opening and closing times listed GMT, EST or? Just Curious.

    Reply to this comment
  4. Gad
    Gad June 04, 05:18

    Makes so much sense! Yet another reason why convention wisdom is nearly always incorrect! Thank you guys for sharing the “Light”

    Reply to this comment
  5. Sanjay
    Sanjay June 07, 00:54

    I have come across many ‘mentors’ and self proclaimed gurus of Forex. I even fought with one; not because i was a better trader, but because the so called guru had a big ego problem. If he was good in what he does, i am a teacher, and i am quite a sought after teacher. Enough said.

    Then i stumbled upon this site. The owners of the site sound young, they are really very humble for the money they make, and explain things in an easy manner. They opened my eyes into the trading world. Although i do not know the nuances of the trade set up based on the 1-2-3 system, its the fundamentals about how banks manipulate price levels that made (and will continue to make) total sense. I still don’t know the entry points, but i totally get the idea, the concept, the overall picture.
    Since i live in Singapore and the time zones are different, i don’t think i can join in the live trade room. This is very regretful. But i will follow this site and Sterling/Chad for as long as will.

    God Bless,

    Reply to this comment
  6. Karim
    Karim June 08, 01:47

    De la bomb !


    Karim – day trader3

    Reply to this comment
  7. James
    James June 13, 11:49

    Hi Chad/Sterling,

    Firstly, great article, once again. I’ve got to tell you – my trading (and undersatanding of the market ‘reality’) has greatly improved in only the short 3-4 weeks i’ve bene part of the DTFL group! Thanks again.

    In regards to the trade report above, i notice that a lot of the profitable trades have an approximate pip count of between 2-45 pips, although typically the SM strategy suggests to aim for 70. Can you clarify this for me??

    Thanks again guys….and keep up the great work!


    Reply to this comment
  8. Giorgio W.
    Giorgio W. March 17, 00:51

    Great article, thank you very much Chad & Sterling!

    Reply to this comment
  9. TaisonM
    TaisonM April 18, 07:30

    This is a fake screenshot/self made. I’ve actually took the time to verify the numbers.

    Example, look at the trade of 2012 may 21st. UEURO/USD

    I calculated according to your sheet you bought around 3.39 pm and sold at the same day at 7:39 pm. According to this in 4 hours you profited from a 416 pips movement.

    Pips do not move that fast in such a short amount of time. I even took the time to look back in 2012 at the exact timeframe and pip movements and your data are false.

    I did it with much more of your trades. And non of these timeframes, pip movements are accurate.

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author August 20, 10:52

      Respectfully, that’s not correct. Please look at the data again and you’ll see that there are 5 digits after the decimal. In other words, the last digit is 1/10th of a pip. What you’re calling a 416 pip move is actually a 41.6 pip move. I hope this helps.

      Reply to this comment

Write a Comment

Forex Trading Course - Day Trading Forex Live