How do you handle floating profit?
A position in profit is a psychological minefield: the urge to close it now fights the plan to let it run. Floating profit feels like money you can lose, and traders behave accordingly.
What's your relationship with open profit?
- the rule that stops you closing early
- how you manage the urge at each R level
- the winner you closed too soon and why
The risk-reward guide explains what early closing costs in expectancy.
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.
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