Learn to Day Trade: The Perfect Balance Trade Accuracy vs Risk-Reward Ratio.

What is more important trade accuracy or risk reward? Should I change what I am doing to try and get a higher accuracy? This is a commonly asked question we get on the desk from developing traders trying to increase their performance. Our answer, typically is that there is a balance depending on your style and what your trading.

 

What tends to be very common with the newer traders is they believe it’s all about accuracy. They also wrongly use the GROSS rather than the NET figures. This partly is due to them using a popular retail trade analysis website which oddly displays their figures in gross rather than net. All of our traders here at TraderEquity get FREE access to PropReports giving them the clear NET figures to correctly work from.

So depending on the style your day trading will depend on the balance between the two that you need to strike. A scalper typically has high accuracy but low risk to reward. This doesn’t mean that having a 1 to 1 risk to reward and a high accuracy would work as you need to remember we need to factor in overhead costs such as commission, ECN costs/rebates and spread etc. On the other hand some traders may have a very low accuracy of around 30% but a high risk to reward.


What is very important is to know your breakeven points based on your NET figures. Having this information to start of with so you know exactly where you stand in terms of the maths is critical especially if your edge in the market is small. We teach all of the points laid out in the courses and more in our mentoring chatroom that all of our traders have access to for free.
PropReport software is also provided free of charge to all of our traders on the desk.


Happy Trading!

 

Published 22/05/2019

Please Note: We can NOT accept any US-based traders, this restriction is based on their location rather than their nationality and we can NOT accept any Canadian based traders directly.




 

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