Simple 4/1 Reward To Risk Ratio Strategy Is More Profitable Than 90%Of Traders...
Published: 2020-12-16
Status:
Available
|
Analyzed
Published: 2020-12-16
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
A trading strategy discussed in the video has historically outperformed 90% of traders over a six-month period.
"I can guarantee it's made more than 90 of traders over the past six months"
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The speaker's tested trading strategy aims for a 4:1 reward-to-risk ratio on each trade.
"four to one reward to risk ratio each time this happens"
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Over a two-month period (October 14th to the video date), a specific trading strategy resulted in 20 losses when employing a 2:1 reward-to-risk ratio.
"the results for this were that we had 20 losses all together using a 2-1 reward to risk"
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Over a two-month period (October 14th to the video date), the discussed trading strategy yielded 22 wins with a 2:1 reward-to-risk ratio.
"we had 22 wins and this is at a two to one reward to risk ratio with the strategy i just taught you"
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A specific trading strategy, over two months with a 2:1 reward-to-risk ratio, resulted in a 24R (24 times the risked amount) profit.
"giving us what we call 24r and r just stands for risk"
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The 24R profit mentioned was achieved on the New Zealand Dollar 15-minute chart.
"on the new zealand dollar 15 minute chart"
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When switching to a 4:1 reward-to-risk ratio for the same strategy, the number of losses increased from 20 to 28, and wins decreased from 22 to 14 over a two-month period.
"instead of 20 losses we now have to add eight to our losses which gives us 28 losses instead of 22 wins we now subtract 8 which is 14 wins"
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A 4:1 reward-to-risk ratio for the discussed strategy resulted in a win rate of approximately 33% over a two-month period.
"giving us our winning percentage means with a four to one risk reward we won roughly 33 percent of the time"
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With a 4:1 reward-to-risk ratio, the strategy generated 28R (28 times the risked amount) profit over two months, despite a lower win rate.
"now that we have a four to one reward to risk let's do the math on that it's gonna be 14 times our four to one reward to risk which is 56 minus our new 28 losses giving us 28r"
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A separate, highly simple trading strategy was tested by executing trades as randomly as possible.
"I traded as random as I could as I said before"
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The random trading strategy employed a stop loss set at three times the Average True Range (ATR).
"I used a three atr stop loss"
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The random trading strategy also aimed for a 4:1 reward-to-risk ratio.
"and then I look for my four to one reward to risk ratio"
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The entry for the random trading strategy was determined solely by the color (bullish or bearish) of the 6 PM candle.
"I placed a trade based on nothing more than the color of the candle"
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If the 6 PM candle was red, a short trade was initiated with a 3x ATR stop loss and a 4:1 reward-to-risk ratio.
"if the six o'clock candle pm was red I went short with a 3x atr three times the atr indicator 3x atr stop loss and a four to one risk reward ratio based on that stop loss"
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If the 6 PM candle was green, a long trade was initiated with a 3x ATR stop loss and a 4:1 reward-to-risk ratio.
"if the candle was green at eighteen hundred or six o'clock pm then I went long with a three times the atr indicator stop loss from my entry and a four to one reward to risk ratio"
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Over six months, a random trading strategy resulted in 28 wins and 78 losses across 106 trades.
"we ended up with 106 trades 28 of those were wins 78 of those were losses"
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The random trading strategy, over six months, generated a 34R (34 times the risked amount) profit, calculated from 28 wins at 4:1 and 78 losses.
"28 times the 4 to 1 reward to risk is 112 remember we only had 78 losses so in six months that created a 34r"
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The random trading strategy involves placing trades at 6 PM based solely on the color of that day's 6 PM candle.
"just placing random trades at six o'clock p.m based on the color of the six o'clock candle"
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The random trading strategy, due to its low win rate, can result in sequences of 9 or more consecutive losses.
"we have one two three four five six seven eight nine losses in a row"
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