risk to reward the right balance?

[forestx]

I am currently trying to figure out a good trading strategy and also learn pine script. I have been trying to develop a strategy using trend analysis with MA signals. Nothing majorly complicated. On paper it is going OK
I developed a systen with long and shorts and over 16 pairs had an average success rate of 56%
I think the code for shorts was off so removed it and when with longs
Got an average over the 16 pairs of 75% wins although there where major differences 90% with btc 30% with XRP

The issue I am having however is with stop loss and general risk reward.
Basically I have a tight tp level and a loose sl. This means with BTC going long despite a 90% win rate I have only got 10% profit going all in each trade (this is better than the 0.39% if I held during the same period)
While with ETH I have a win rate of 75% but a loss of 8% on account

I am trying to figure out how to get the balance right between r:r in a market that is volatile. I am looking at a moving stop loss and connecting it the ATR but having issues coding this properly.

What are peoples thought on the best r:r or how do you set these levels
 

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[Zilon]

Using a tight take profit margin will make it somehow impossible to consider losses as part of the business and will make you find it difficult using stop loss. Go for a more higher profit that is realistic so if you make profits it should be able to cover up for losses if your stop loss get triggered. Setting your stop loss is upto you based on your method of analysis but it should be void of greed and should be capable of withstanding your account size

[Ararbermas]

We have different strategies so maybe it will not work for you, i always used the 1 is to 2 ratio to prevent massive losses.. But sometimes below the weak candle i consider it a safe placed as well to protect my capital from errors and the take profits it depends on my analysis . By the way i used to trade swing, break and sometimes scalping and for me that risk to reward setup is very useful. Less losses and big profits that's what it's.

[palle11]

I read you saying you have a tight to and a loose stoploss and I think that is where you are having your issue. As a beginner I was thinking that was the right way to do money management but nope that is not the right and professional way to trade for profit. For maximum profit , you need to reverse your strategy to tight stoploss and a loose profit margin so that you can accumulate more profit and cut your losses faster.

[dunfida]

I read you saying you have a tight to and a loose stoploss and I think that is where you are having your issue. As a beginner I was thinking that was the right way to do money management but nope that is not the right and professional way to trade for profit. For maximum profit , you need to reverse your strategy to tight stoploss and a loose profit margin so that you can accumulate more profit and cut your losses faster.

Investment does really involve lots of trial and error which means that whenever you do make out some mistakes on a particular strategy then you would

really make out some adjustments which would really be making you a lot better than before. Risk and Reward thing indeed and good management on someones investment is all  you do need.

It should be balanced and dont make yourself to be that impulsive.

[AliMan]

We have different strategies so maybe it will not work for you, i always used the 1 is to 2 ratio to prevent massive losses.. But sometimes below the weak candle i consider it a safe placed as well to protect my capital from errors and the take profits it depends on my analysis . By the way i used to trade swing, break and sometimes scalping and for me that risk to reward setup is very useful. Less losses and big profits that's what it's.

You can't actually say that's the reality, having huge profit isn't consistent in most certain cases. There were times you need to take the risk in order to see whether you're losing or gaining, and most whales always take that actions because they had money to rule over. With us small time traders, fears and anxiety lingers within us because of financial capability issues so if you wanted to avoid several problems minimize the risk through acquiring focused trading skills.

[breathlessz]

I am currently trying to figure out a good trading strategy and also learn pine script. I have been trying to develop a strategy using trend analysis with MA signals. Nothing majorly complicated. On paper it is going OK
I developed a systen with long and shorts and over 16 pairs had an average success rate of 56%
I think the code for shorts was off so removed it and when with longs
Got an average over the 16 pairs of 75% wins although there where major differences 90% with btc 30% with XRP

The issue I am having however is with stop loss and general risk reward.
Basically I have a tight tp level and a loose sl. This means with BTC going long despite a 90% win rate I have only got 10% profit going all in each trade (this is better than the 0.39% if I held during the same period)
While with ETH I have a win rate of 75% but a loss of 8% on account

I am trying to figure out how to get the balance right between r:r in a market that is volatile. I am looking at a moving stop loss and connecting it the ATR but having issues coding this properly.

What are peoples thought on the best r:r or how do you set these levels
 

for the best rr in my opinion at least 1:1, the smaller the stoploss ratio, the better, I think whatever strategy you use and you feel comfortable, then continue. Everyone has their own strategy, of course, but don't forget to practice trading psychology, because I think that's the most important thing to become a professional trader.

[forestx]

I copied another strategy I found on youtube. It was just a cross over strategy and the you tuber was saying it worked "100%" of the time. I tested it and it did not work 100%  but was successful 70-80% with a lot of trades.
However same issue as before with stop loss and take profit levels also the strategy worked best with ETH and LTC 30 and 50% gain on the account while it bleed on Dodge.

Looking at these two strategies and in future testing I think a multi take profit or movement of stop loss will be needed. This will me allow to cut down on losing trades while hopefully allowing runs be it shorts or long
Doing a moving stop loss on one strategy would allowed me have made 100% gain on account since October

I need more testing and trying out different strategies before moving in the new year to paper trading

[palle11]

I tested it and it did not work 100%  but was successful 70-80% with a lot of trades.
However same issue as before with stop loss and take profit levels also the strategy worked best with ETH and LTC 30 and 50% gain on the account while it bleed on Dodge.

Personally I think strategy that works for you 70-80% of the time is a good strategy and you already have a tool in your hand that you can look out the remaining percentage that you are looking for if you are not satisfied with the 80% profit. Instead of trying to look for other fresh strategy, you can work with what you have because the YouTuber saying it works 100% may not be telling you the truth. I believe strategies don't work 100% if it is 100% it means no failure which is impossible in the market and that is why there is stop loss.

[forestx]

I know a strategy working 70% of the time is good my issue is it is working 70% with a r:r of 4:1 I am trying to bring that down to 1:1 or 1:2 thats what I am having difficulty with and as I said may need to move my stop loss

[michellee]

I know a strategy working 70% of the time is good my issue is it is working 70% with a r:r of 4:1 I am trying to bring that down to 1:1 or 1:2 thats what I am having difficulty with and as I said may need to move my stop loss

Then you need to search for what strategy will work for you. That is why we always modify our strategy to work from time to time. To have the right strategy, we need to learn more and test one by one. Hopefully, we can improve our skills because we can get much information and experience by modifying the strategies. Maybe right now you feel difficult but if you do not stop from what you did, I am sure you will have the right strategy that will work for you.

[AakZaki]

You can't actually say that's the reality, having huge profit isn't consistent in most certain cases. There were times you need to take the risk in order to see whether you're losing or gaining, and most whales always take that actions because they had money to rule over. With us small time traders, fears and anxiety lingers within us because of financial capability issues so if you wanted to avoid several problems minimize the risk through acquiring focused trading skills.

like the current moment of course the whales are taking their profits and the market is in a bear condition. all the small traders started to panic and sell their assets cheaply. Whales have the power to manipulate the market well because there is a lot of capital, we as small traders can only follow them, don't go against the flow if you don't want to sink, just follow the whales game.

[Hamphser]

You can't actually say that's the reality, having huge profit isn't consistent in most certain cases. There were times you need to take the risk in order to see whether you're losing or gaining, and most whales always take that actions because they had money to rule over. With us small time traders, fears and anxiety lingers within us because of financial capability issues so if you wanted to avoid several problems minimize the risk through acquiring focused trading skills.

like the current moment of course the whales are taking their profits and the market is in a bear condition. all the small traders started to panic and sell their assets cheaply. Whales have the power to manipulate the market well because there is a lot of capital, we as small traders can only follow them, don't go against the flow if you don't want to sink, just follow the whales game.

But how you would determine if its a whales game? Its really hard to determine between a manipulative kind of movement and a typical movement made out by sell offs with those retail traders or investors which it

makes more hard to understand and made out some presumptions on how things should really be done next in line.Speaking of risk and reward ratio then if you are dealing with investment then this is a must.

Proper money and risk management is crucial for you to be able to sustain this market which is really hard to predict on.

[Silberman]

After reading your posts I am glad that someone is finally backtesting their strategy before they implement it in the market, now truth to be told there is not such a thing as an absolute balance between the risk and reward ratio, and there are many reason for this, as you are experimenting what works in bitcoin does not work on xrp, by the way this is something I found myself as well on my research, this is how I know you are actually doing your homework, however a strategy needs to work on several different markets at the same time so it is not really a surprise there will be markets where your strategy losses money, but as long as you make money in the majority of the markets then you will do fine.

[TheEconomists]

I will say you go for high take profit the reason is that if set your stop lost too close then there is a tendency that you will continue to be making loses almost at all the time of your trading and that chose that your straight if not working. At this point you have to rethink of doing something new.

[awik p]

I read you saying you have a tight to and a loose stoploss and I think that is where you are having your issue. As a beginner I was thinking that was the right way to do money management but nope that is not the right and professional way to trade for profit. For maximum profit , you need to reverse your strategy to tight stoploss and a loose profit margin so that you can accumulate more profit and cut your losses faster.

He must commit on that stop loss strategy and stop being greedy because in trading we should always work based on our strategy and that will always depend on every tokens/coins that you are going to trade. There’s a lot of ways to be more effective in trading, stay focus on your goal and have a good patience since trading sometimes also takes time before you can have the profit that you desire.

in trading we must also plan a portfolio for the development of our trading in a healthy manner, there may be a loss at some point, but we must also control it so that the loss is in accordance with the stop loss we planned, so that everything goes according to plan, and over time our account will become big by itself

[palle11]

I will say you go for high take profit the reason is that if set your stop lost too close then there is a tendency that you will continue to be making loses almost at all the time of your trading and that chose that your straight if not working. At this point you have to rethink of doing something new.

But choosing a tight stoploss can still save you from huge losses than when you open it wider but the important thing is to have a working strategy that will show you the trend of the market because if you spot out the trend,  you are likely to get your trade order right and accumulate your profit faster and the trend won't turn against you. The reason we lose is because the trend are not properly spotted, so if we enter against the waves it will hit the stoploss.

[forestx]

OK I have tested a couple of strategies but haven't found anything ground breaking. I am still having issues with stop loss and taking on too much risk
IE if I have a r:r of 4:1 then I can get a 70%+ win rate but gain on account is smallish and as I said can range hugely based on the coin
As mentioned moving the stop loss and trailing it seem to be a good bet. Also using ATR as a stop loss but risks large losses.

What I want to do and I am sure we all do is capture large moves and ride the wave. Alot of losses seem to be created by either opening trades in an area of conciliation or a wick or general move the wrong direction before continuing in the right direction
I may try and combine the ADX but tried looking at it and didnt see any major benefit to it 

The principle of trend following doesnt seem that hard but risk management and emotions seems to be the issues to over come
I will do more testing and learning of Pine Script but wont really know for certain what works and doesnt until I live trade with a demo account or for real

[adaseb]

Honestly it’s very difficult to code any type of trading bot system that will work long term. You might also code one, and run a backtest and see if it’s profitable but when you trade it live you will find that it doesn’t work.

With crypto this is very common due to slippage and liquidity. A bot can’t account for slippage or liquidity. And a big issue with crypto is that many times during huge market volatility, the exchanges might go offline.

In a backtest you never account for this issues hence the bots are never going to be reliable.

[palle11]

With crypto this is very common due to slippage and liquidity. A bot can’t account for slippage or liquidity. And a big issue with crypto is that many times during huge market volatility, the exchanges might go offline.

In a backtest you never account for this issues hence the bots are never going to be reliable.

You are correct talking about the volatility and the challenge it cause to the exchange. The volatility time is a moment of uncontrollable market movement that will force the platforms to go off maybe temporarily and this time, the bots can't also function. The volatility is also a time that traders have accused exchanges of manipulation and whether true or false is to be determined.