Originally posted at forexfactory on May 23, 2011:
Originally Posted by Custoswhat average Risk:Reward ratio do you have to achieve that kind of win-rate?
I would assume that it might be a negative risk:reward ratio.
The average R:R ratio depends on the trader of course and how well they follow the system. Also the average R:R depends on how many trades you want to place and how fast you want to compound your account.
I know of trading system that have 80-99% winrate that has a slightly negative risk:reward ratio.
I also know of trading system that has a 80-99% winrate using 1:1 R:R
I also know of trading system that has a 80-99% winrate with an average R:R of 2.0-3.0. Although this one doesn’t generate as many signals as the other ones.
Of course you could trade all the above systems together and mix all the R:R together and see what you get. They are all highly discretionary especially in the beginning.
You can’t really backtest them though. Only forward testing is possible.
Why can’t you backtest them? Because if it was so simple to gather chart, price and technical indicator data, then the supercomputers at goldman sachs would of figured it out already and closed the inefficiency.
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