No doubt many traders will say having a good risk reward ratio very important without hesitation. Professional traders recommend at least 1:3 risk reward ratio. However, how many traders follow this rule consistently. Not the scalpers and probably a good number of day traders as well.
Personally I am having issues with sticking to a good risk reward ratio in my trades. The market often likes to do stuffs like pulling back (sometimes stopping you out) after moving in your desired direction. It brings uncertainty whether one should take profit or let it run. It is one of the market behaviors that makes trading difficult. Getting into a good trade itself is already not easy. Even if you have a position with running profit, it is difficult to decide when to take profit.
Recently I am seeing a problem with taking profits as little as 20 pips. Why? Because if that trade turns out to be bad (my stop loss is usually about 20 pips), you need a winning trade just to break even. Considering how risky currency trading is, it is silly to make 2 trades and make nothing out of that, considering you have just exposed yourself to two potential losses. It is just as easy to incur losses from several losing trades, making it exceedingly hard to even make back the money that you lost.
Discuss your personal view of risk reward ratio as a trader. You don't have to agree with the views I have stated above.
Personally I am having issues with sticking to a good risk reward ratio in my trades. The market often likes to do stuffs like pulling back (sometimes stopping you out) after moving in your desired direction. It brings uncertainty whether one should take profit or let it run. It is one of the market behaviors that makes trading difficult. Getting into a good trade itself is already not easy. Even if you have a position with running profit, it is difficult to decide when to take profit.
Recently I am seeing a problem with taking profits as little as 20 pips. Why? Because if that trade turns out to be bad (my stop loss is usually about 20 pips), you need a winning trade just to break even. Considering how risky currency trading is, it is silly to make 2 trades and make nothing out of that, considering you have just exposed yourself to two potential losses. It is just as easy to incur losses from several losing trades, making it exceedingly hard to even make back the money that you lost.
Discuss your personal view of risk reward ratio as a trader. You don't have to agree with the views I have stated above.
'For the market to work, it needs people who think that they can beat it.'