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Risk/Reward link with Win rate


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Hi all,

I read this article about how risk/reward and win rate and linked.  The thing is though in order to use the cheat sheet for risk/reward and win rate, you need to know what your win rate is first based on historical trades?  But to do that you had to have decided on a risk/reward ratio already when setting limits/stops?  I feel like this is a chicken and egg situation.

https://www.tradeciety.com/how-to-use-reward-risk-ratio-guide/

What this is suggesting is that if your win rate is higher you can have more risk and less reward e.g the last row in the table is 75% win rate gives 0.3:1 reward to risk.  But if you look at it a different way is it not like saying take more risk and you will win more?

 

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36 minutes ago, u0362565 said:

Hi all,

I read this article about how risk/reward and win rate and linked.  The thing is though in order to use the cheat sheet for risk/reward and win rate, you need to know what your win rate is first based on historical trades?  But to do that you had to have decided on a risk/reward ratio already when setting limits/stops?  I feel like this is a chicken and egg situation.

https://www.tradeciety.com/how-to-use-reward-risk-ratio-guide/

What this is suggesting is that if your win rate is higher you can have more risk and less reward e.g the last row in the table is 75% win rate gives 0.3:1 reward to risk.  But if you look at it a different way is it not like saying take more risk and you will win more?

 

Hi, yes I cover this quite extensively in the 'Trade Planning and Testing' thread where there is also a link to download a basic free spreadsheet that will auto calc cumulative win rate and cumulative risk reward that you can plot onto the profitability graph chart.

  • Great! 1
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4 minutes ago, Caseynotes said:

Hi, yes I cover this quite extensively in the 'Trade Planning and Testing' thread where there is also a link to download a basic free spreadsheet that will auto calc cumulative win rate and cumulative risk reward that you can plot onto the profitability graph chart.

Aww you're a good chap Tom Bombadil 🤓🐮😻

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3 hours ago, Caseynotes said:

Hi, yes I cover this quite extensively in the 'Trade Planning and Testing' thread where there is also a link to download a basic free spreadsheet that will auto calc cumulative win rate and cumulative risk reward that you can plot onto the profitability graph chart.

Great thanks for taking the time to do that,I'll check it out!

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  • 2 years later...
On 05/06/2020 at 16:36, Caseynotes said:

Hi, yes I cover this quite extensively in the 'Trade Planning and Testing' thread where there is also a link to download a basic free spreadsheet that will auto calc cumulative win rate and cumulative risk reward that you can plot onto the profitability graph chart.

Hi

I put Trade Planning and Testing in the search but it didn't return anything with that title. Do you have a direct link?

 

Thanks

Elly

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