Is Win Rate Or Risk-Reward Ratio Better?

Trading Forex With Zi Cheng
fong zi cheng

This question has been asked countless of times, no matter by my viewers or by the people outside. I will try to explain it in a very simple way. Have a look at the picture below.

If youre using a 1:1 RR, you must win at least 50% to stay break even. If youre using a 1:3 RR you just need a 30% win rate to be profiting from your capital. The higher RR you have, the lesser number of trades you need to win to be profitable.

If you are someone that supports high win rate, you're not completely on the wrong side. It is still possible to be profitable if you have a high win rate. Just make sure that, the trades that you win are able to cover your losses, then you're safe to go.

Let me share you something powerful about RR. Let's say you have 6 losing streaks and you're using 1:1 RR. You need at least 6 winning trades in a row to be back to break even. However if you have 6 losing streaks, and you're using 1:3 RR. You just need to win 2 trades to break even. I am sure you already know the answer which is easier and more doable. This is the power of RR.

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Last updated: 10/16/2023 17:30

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