Article Summary: Before placing a trade, traders should look to contain their risk. 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 notThe Forex Risk Reward Ratio has been in debate since the beginning of time. If you have been trading FX or simply read up about it you would be familiar with the terms used.
When it comes down to Risk Reward we have 2 types of traders or strategies. On the one side we have our Scalping(Pip and Run) traders. This strategy usually leads to short term trades. The second type of trader focuses on their Risk Reward Ratio. The most common used is 1:2. Also referred to as Day Risk reward ratio in forex trading za or Day Traders.It has been said that it is not possible to be profitable long term when scalping the market.
Forex Authority, Sterling Suhr from DayTradinfForexLive(DTFL) has been challenging anyone to show him a long term profitable track record by simply scalping. A very bold statement to make to say the least. In my honest opinion from personal experience.