I have to get something off my chest…
I can't stand listening to another trading educator say:
“You need at least a 2:1 reward-to-risk to get profitable in trading”
If you ask me – and most of the successful traders I interview would say the same – that's a bunch of fluff.
It's one of these “overrated” sayings that's been said, said, and re-said for many years.
And new traders dive in the market with their fancy 2:1 profit targets, hoping it will make them successful.
But then they can't comprehend why they lose most of their trades… and their P&L goes down the drain.
I know a handful of traders making money long-term with a 0.5:1 or smaller target.
They use what we'd call the “insurance model”.
Like insurance companies, they collect small profits on and on.
Occasionally they'll have that big expense (loss) to give back.
But if they collect enough of these small profits, they can cover their bigger losses & have a big trading paycheck to take home.
In the eyes of brainwashed newbie traders, they're gambling.
Even though that model could work even better than 2:1 targets long-term.
Simply because, as you know, insurance companies make big stacks of money.
But even more, I know that in my trading…
Some of my best monthly returns happened when I had a 1.5R target.
I've tried 3:1 targets because they looked great in backtests, but they gave me some serious headaches when trading live.
I also tend to do better when I move my stop loss to breakeven quickly.
I get a lot of small wins, some losses, and a couple of full targets.
But all that without large drawdowns because my targets were to far for the market to reach.
So what's my point?
It's not because someone says you need to use a 2:1 – or whatever target – that you need to listen to them.
What matters is trading according to your personality.
If you have an edge risking more than you win each time, go for it!
You'll probably make it up with a higher win rate anyways.
I'm tired of these “gurus” who claim they know everything and share false info.
The beginners love to get their advice, but end up worse off for listening to them.
Instead, do things your
way and stop listening to all the nonsense & opinions…
Keep crushing it 💪 📈