Think about this for a moment. A trading system that has a risk \/ reward target of 1:2 meaning only needs to be correct 38% of the time to break even. Better than 38% and a 1:2 risk \/ reward strategy is potentially very profitable. The probability when you trade is 50\/50, the market can only go up or down, so gaining an edge to be at least 50% correct with a risk \/ reward target surely cannot be that difficult. It\u2019s not the edge or % success that is the question, it\u2019s the behavior of the trader in being able to focus over the long term on 1 : 2 and not trade to trade. So consider thinking in 10\u2019s.<\/p>\n
Instead of evaluating your result day-to-day or week-to-week consider evaluating your performance after the next 10 trades. Lower your expectation on each trade, just follow your system, narrow your focus and ensure your risk is less than the reward and trade the plan for the next 10 trades. Then evaluate your overall result allowing the trades to show an overall success risk \/ reward ratio after 10 trades.<\/p>\n
Many successful traders will be able to tell you what their risk \/ reward ratio is. In other words for every $1 they risk what is their average return? I think all traders should know these numbers and a good start would be to work out yours after the next ten trades.<\/p>\n
So thinking in 10\u2019s is all about following your strategy for 10 trades and not thinking win or loss per trade. Remember it’s a numbers game over time, you will win some and you will lose some and it\u2019s about how much you win when you win and how little you lose when you lose. Risk management is the key.<\/p>\n
For more trading tips join me every Wednesday evening live online at 7pm AEST. You can simply click on this link and join the coaching session. http:\/\/gomarkets.webinato.com\/room1<\/a><\/span><\/p>\n Andrew Barnett is a\u00a0regular Sky News Money Channel Guest and one Australia\u2019s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar.<\/p>\n\n\n
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