Risk reward ratio

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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azfyazfy
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:D :lol:
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Derek27
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Sorry, I intended to post that to your other thread with the same name.
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azfyazfy
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No problem it's ok
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azfyazfy
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Can anyone help me to show the best way to use risk reward ratio
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Derek27
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azfyazfy wrote:
Thu Oct 06, 2022 6:15 pm
Can anyone help me to show the best way to use risk reward ratio
Can you elaborate on the question? What exactly do you wish to use it for?
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azfyazfy
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Derek27 wrote:
Thu Oct 06, 2022 6:34 pm
azfyazfy wrote:
Thu Oct 06, 2022 6:15 pm
Can anyone help me to show the best way to use risk reward ratio
Can you elaborate on the question? What exactly do you wish to use it for?
I created my own risk to reward ratio system but the problem is that I don't understand at what percentage i use to be profitable in long term
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azfyazfy
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azfyazfy wrote:
Thu Oct 06, 2022 6:44 pm
Derek27 wrote:
Thu Oct 06, 2022 6:34 pm
azfyazfy wrote:
Thu Oct 06, 2022 6:15 pm
Can anyone help me to show the best way to use risk reward ratio
Can you elaborate on the question? What exactly do you wish to use it for?
I created my own risk to reward ratio system but the problem is that I don't understand at what percentage i use, to be profitable in long term
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Derek27
Posts: 23476
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

azfyazfy wrote:
Thu Oct 06, 2022 6:46 pm
Derek27 wrote:
Thu Oct 06, 2022 6:34 pm


Can you elaborate on the question? What exactly do you wish to use it for?
I created my own risk to reward ratio system but the problem is that I don't understand at what percentage i use, to be profitable in long term
Your very own post explains that. You simply divide the risk by the reward and that's the strike-rate you need to break even.

viewtopic.php?f=36&t=26363&p=311327#p311327
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azfyazfy
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I set 10% for loss both side and 12.5% for profit whatever i want at any side.

If i back team A 10000 @ 1.5 odds and if odds comes in my favour @ 1.33 so i have a multiple choice i can make any ratio whatever i want but my system says go with 4 to 1 and i lay 9545 @ 1.33.

So now on team A i am winning 1819 and on team B i am losing -455

My confusion is am i using risk reward ratio correctly.
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azfyazfy
Posts: 74
Joined: Wed Aug 29, 2018 5:12 pm

azfyazfy wrote:
Thu Oct 06, 2022 6:59 pm
I set 10% for loss both side and 12.5% for profit whatever i want at any side.

If i back team A 10000 @ 1.5 odds and if odds comes in my favour @ 1.33 so i have a multiple choice i can make any ratio whatever i want but my system says go with 4 to 1 and i lay 9545 @ 1.33.

So now on team A i am winning 1819 and on team B i am losing -455

My confusion is am i using risk reward ratio correctly.
If i back team A 10000 @ 1.5 odds and if odds goes against @ 1.66 i accept same loss on both team.
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azfyazfy
Posts: 74
Joined: Wed Aug 29, 2018 5:12 pm

azfyazfy wrote:
Thu Oct 06, 2022 7:05 pm
azfyazfy wrote:
Thu Oct 06, 2022 6:59 pm
I set 10% for loss both side and 12.5% for profit whatever i want at any side.

If i back team A 10000 @ 1.5 odds and if odds comes in my favour @ 1.33 so i have a multiple choice i can make any ratio whatever i want but my system says go with 4 to 1 and i lay 9545 @ 1.33.

So now on team A i am winning 1819 and on team B i am losing -455

My confusion is am i using risk reward ratio correctly.
If i back team A 10000 @ 1.5 odds and if odds goes against @ 1.66 i accept same loss on both team 1000
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Derek27
Posts: 23476
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

azfyazfy wrote:
Thu Oct 06, 2022 6:59 pm
I set 10% for loss both side and 12.5% for profit whatever i want at any side.

If i back team A 10000 @ 1.5 odds and if odds comes in my favour @ 1.33 so i have a multiple choice i can make any ratio whatever i want but my system says go with 4 to 1 and i lay 9545 @ 1.33.

So now on team A i am winning 1819 and on team B i am losing -455

My confusion is am i using risk reward ratio correctly.
What currency are you using? When using examples it helps to use smaller figures like £10, the maths is the same.

If you win from such trades more than 20% of the time it would be beneficial, otherwise it won't.

You also need to consider the benefits of consistent profits. If you always green up and grab the cash (or cut your losses), it may not be the most optimal result profitwise, but securing a profit every week and avoiding the odd disastrous week is worth paying a few quid for. If you ever study the Kelly Criterium you'll realise that sometimes when you're in a position to guarantee a profit it can be mathematically sound to place a poor value bet to get rid of your liability and guarantee a profit.
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Derek27
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Joined: Wed Aug 30, 2017 11:44 am
Location: UK

azfyazfy wrote:
Thu Oct 06, 2022 7:05 pm
azfyazfy wrote:
Thu Oct 06, 2022 6:59 pm
I set 10% for loss both side and 12.5% for profit whatever i want at any side.

If i back team A 10000 @ 1.5 odds and if odds comes in my favour @ 1.33 so i have a multiple choice i can make any ratio whatever i want but my system says go with 4 to 1 and i lay 9545 @ 1.33.

So now on team A i am winning 1819 and on team B i am losing -455

My confusion is am i using risk reward ratio correctly.
If i back team A 10000 @ 1.5 odds and if odds goes against @ 1.66 i accept same loss on both team.
So you cut your losses when the trade goes against you but you let your bet run when the market suggests it's value. Nothing wrong with that, I used to let my profits run as free bets and red-up my losses. I'd get a few big wins but I'd also have runs of frustration when juicy free bets fall by the wayside. I found my results are more consistent and less stressful by greening up and moving on.
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azfyazfy
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But i need to know about my risk to reward ratio, if i continues to place my bet this way let say after 100 bets where i am going to stand, how i calculate that.
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Derek27
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Location: UK

azfyazfy wrote:
Thu Oct 06, 2022 8:39 pm
But i need to know about my risk to reward ratio, if i continues to place my bet this way let say after 100 bets where i am going to stand, how i calculate that.
You can't calculate how much you'll win. You can only try it to small experimental stakes and see how you do. If you keep all the details of each trade in a spreadsheet you can easily work out "what ifs?" and see if greening up would be more profitable.

Obviously you'll have reasons behind your system but you have to put it to the test, look at the results and be prepared to adjust and optimize it.
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