One strategy or many: how many setups do you trade?
One setup, mastered, usually beats three, half-learned — but one setup also leaves you flat for long stretches. The balance between focus and diversification is personal and rarely deliberate.
How many do you run?
- the setups you trade and how they differ
- how you know which one to use when
- whether adding setups ever helped or just diluted
The expectancy guide argues for knowing each setup's real numbers.
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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