How do you keep a strategy simple?
Simple strategies survive contact with real markets; complex ones die of their own exceptions. But simplicity takes discipline — the urge to add a filter for every loss is constant.
How do you resist?
- the complexity you've removed and why
- how you decide a rule earns its place
- the simplest version of your strategy that still works
The expectancy guide shows why simplicity tests better.
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…