Confirmation bias: what are you ignoring?
Once a view forms, the mind collects evidence for it and filters the rest — the opposing data, the contradicting chart, the analyst who disagrees. The bias is universal; the defence is deliberate.
What's your defence?
- how you hunt for evidence against your view
- the opposing source you force yourself to read
- the bias that cost you most
The expectancy guide rewards being wrong cheaply.
Background: Risk-reward ratio, win rate and expectancy: the maths behind a trading edge
A high win rate can still lose money. See how win rate and risk-reward combine into expectancy, with break-even win rates and worked examples.
What is a good risk-reward ratio in forex?
There isn't one right ratio. What matters is expectancy, the win rate and ratio together. A 1:2 ratio breaks even at about 33% winners before costs, while a 1:1 ratio needs 50%.
How do you calculate trading expectancy?
Multiply the win rate by the average win and subtract the loss rate multiplied by the average loss. Measuring wins and losses in multiples of the amount risked (R) makes the result easy to compare.
Comments
Log in to join the discussion. Comments follow the community guidelines.
Log in to commentLoading comments…