Take profit or trail it: what's easier for a new trader?
Beginners often close winners too early and let losers run, which is the exact opposite of how profitable trading usually works. A fixed take-profit level at least forces the decision before the trade opens.
Which do you do?
- a fixed target based on your stop distance
- a trailing stop
- manual exits, and how that's worked out
The risk-reward and expectancy guide shows why a planned exit matters more than entry timing.
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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