risk to reward the right balance?

[pawanjain]

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

[1714682444]

1714682444

[1714682444]

1714682444

[1714682444]

1714682444

[1714682444]

1714682444

[Pasa32]

I think the stop loss must be put by doing the technical analysis. You will get the price to set stop loss. If you need any ratio then I think you must trade 1 is to 2 or 1 is to 3.

[lixer]

I developed a systen with long and shorts and over 16 pairs had an average success rate of 56%

Only 56% ? I guess you must work on your strategies. You must have your hitting ratio more than 85% which is because on average you may not make same kind of profits hence just counting the profitable trades against losing trade may not help until you are near to 99% hitting rate.

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 current overall trend of crypto space is bullish hence your strategies might look good when you go longs and might get you losses when you you short. A good strategy may not produce different hit ratios between long and shorting.

The issue I am having however is with stop loss and general risk reward.

You must follow same kind of technical strategy for stoploss and risk-reward ratio should be 90-10. If you follow trailing stoploss then you can easily get higher profits against cutting losses early.

[Lanatsa]

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

Lots of trial and error I would say because we cant really just set out a fix kind of strategy on every trade that we do make and we do have different level of risk reward ratio to be set since not all would be having the same of capital or bankroll that they do have on their trading accounts.It is just typical or normal stuff that you should balance both things if you do like to sustain this market.
Try to balance as much as a you can and don't have that kind of gambler like mind because you would really just making your capital to be fastly be depleted once you do
make out bad decisions.

[bitgolden]

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.

That is always a bit of a problem for me and I never really believe that exchanges can't handle it. I get that during the hype periods we may get 10x or even 100x more people going to exchanges and exchanges can't handle that much load at all times, which means there are times when exchanges go down and we can't trade properly and it makes it very volatile.

However, these are billion dollar worth companies, look at coinbase, they worth north of 100+ billion dollars even on their bottom price (by marketcap calculated from stock market) which means that they should be able to have servers that can handle any load people can throw, like tens of millions of people going to their website even during hyped periods. Which means that we are talking about them having a solution but yet they are not really doing it, so maybe they are doing it on purpose?

[Mpamaegbu]

Nothing majorly complicated.

Yep, it's good to always keep the charts neat and simple. Too many indis complicate things and confuses the eyes in picking up prompt signals.

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.

That's a big issue, honestly. Basically, it should be the other way round with what you're practicing. Have a tight SL and a loose TP. It's a bad practice to allow your trades run loose or adjust your SL below whenever you think you might be taken out on a trade, just to keep it running. The only good SL adjustment one should do is the one when one is already in profit. And that's taking it up, and not lowering it.

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

I like a 1:3 and above as Risk to Reward. I don't pick a trade that's anything less than that ratio.

[palle11]

Did you use the mentioned trading strategy on a simulator for getting average results? R:R can be adjusted depending on the risk management and bankroll %.

It can be adjusted but it is better that it is steady because that will help us to maintain our plans and choices of what to trade and when to trade. If we have the adjustment mentality on that, you will realize you want to enter into any trade just because you can adjust to suit your need to trade.

[FatFork]

Did you use the mentioned trading strategy on a simulator for getting average results? R:R can be adjusted depending on the risk management and bankroll %.

It can be adjusted but it is better that it is steady because that will help us to maintain our plans and choices of what to trade and when to trade. If we have the adjustment mentality on that, you will realize you want to enter into any trade just because you can adjust to suit your need to trade.

It is not a good idea to make trading decisions on short-term basis. You have to take time to sit down and study what the market is doing at any time. When you think of your trade you should really know that the overall direction of the market is more important than the short-term performance of the market. This is something that no bot or automated trading tool can do, as far as I know.

[jostorres]

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 kind of issues that you are facing when implementing such features? Basically for trailing or moving stoploss you need to alter the existing order to update the new stoploss level as some exchanges are allowing to edit the pending orders whereas in most exchanges, we need to cancel the pending stoploss order and need to place a new order. I am not expert in such coding still trying to suggest what practically I tried in my beginning days. Only innovating new concepts are difficult and implementing them in coding is not a big deal so googling may help you better.

[so98nn]

Hm, working on risk to reward ratio is good strategy for many reasons and the very important aspect out of all is risk here. When we start minimising the risk we ultimately adding more into our profits. After all the profits that comes to us while trading is because of the risks that we take in the market, starting from investing our hard earned money to getting on to those marginal differences which are our profits at the end.

The right balance for me is how much I’m investing, how much I’m getting back, and how much I could rely on my technical analysis too. So it’s many of the things really.

[Emitdama]

I think the stop loss must be put by doing the technical analysis. You will get the price to set stop loss. If you need any ratio then I think you must trade 1 is to 2 or 1 is to 3.

I agree with the first part, stop loss is a must for any trade, especially when trading lesser-known and tokens with a smaller market cap because you never know what token could turn out to be the next Squid Game Token scam. I am not sure about the risk and reward factor because I am a trade who believes in instincts and if you are going to code a bot that works on numbers, more often than not, you will lose money because the market is volatile.

[savetheFORUM]

I think the stop loss must be put by doing the technical analysis. You will get the price to set stop loss. If you need any ratio then I think you must trade 1 is to 2 or 1 is to 3.

I agree with the first part, stop loss is a must for any trade, especially when trading lesser-known and tokens with a smaller market cap because you never know what token could turn out to be the next Squid Game Token scam. I am not sure about the risk and reward factor because I am a trade who believes in instincts and if you are going to code a bot that works on numbers, more often than not, you will lose money because the market is volatile.

Yeah, I as well agree though that the 1:3 Risk-Reward ratio, respectively, should be good because you don't want to be too complacent with small profits in crypto trading. I still prefer trading based on what you feel and no I'm not talking about external factors but internal ones like what you really feel in isolation about the token and the project as a whole.

[Hamphser]

I think the stop loss must be put by doing the technical analysis. You will get the price to set stop loss. If you need any ratio then I think you must trade 1 is to 2 or 1 is to 3.

I agree with the first part, stop loss is a must for any trade, especially when trading lesser-known and tokens with a smaller market cap because you never know what token could turn out to be the next Squid Game Token scam. I am not sure about the risk and reward factor because I am a trade who believes in instincts and if you are going to code a bot that works on numbers, more often than not, you will lose money because the market is volatile.

Yeah, I as well agree though that the 1:3 Risk-Reward ratio, respectively, should be good because you don't want to be too complacent with small profits in crypto trading. I still prefer trading based on what you feel and no I'm not talking about external factors but internal ones like what you really feel in isolation about the token and the project as a whole.

And you wont feel out those things if you dont have sufficient experience because you wouldnt really be that confident towards your decisions if you dont have this kind of experience.
Risk reward balance ration will vary but of course we would really be targeting out considerable profit level on a specific capital that we had thrown off.

Right balance is something we should be mindful because you wouldnt really sustain this market if you wont really be that versatile when it comes into your decisions.

Everything should be balanced even though it wont be precise or perfect but at least you are really on the right path of things.

[palle11]

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

Adjusting your parameters because you don't want to lose or you want to gain more is a factor that will take your account off. It is easy to achieve a risk reward ratio by setting our stop loss so that when there is volatility, we already know what we are going to lose and that is the only way we can achieve it.

[TheGreatPython]

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

Adjusting your parameters because you don't want to lose or you want to gain more is a factor that will take your account off. It is easy to achieve a risk reward ratio by setting our stop loss so that when there is volatility, we already know what we are going to lose and that is the only way we can achieve it.

Yeah, the role of stoploss order must be too crucial on balancing better risk-reward ratio. When you are able to cut your losses early and with the help of trailing stoploss, if you maximize your profits then obviously you will get  higher rewards against losing trades. For example, we need to cut losses at 5% or 10% but when we are sailing at market directions then we could try to cover maximum profits which may be even 100% hence if you face more number of losing trades will not bother you in any means.

[redsun114]

the role of stoploss order must be too crucial on balancing better risk-reward ratio. When you are able to cut your losses early and with the help of trailing stoploss, if you maximize your profits then obviously you will get  higher rewards against losing trades.

I agree that without cutting your losses early, you cannot get the maximum rewards out of crypto trading. When you are letting your losses grow then your rewards will get shrink. To handle the negative market situation better we must need to go for stop-loss order which eventually lead you to get you better risk-reward ratio.

For example, we need to cut losses at 5% or 10% but when we are sailing at market directions then we could try to cover maximum profits which may be even 100% hence if you face more number of losing trades will not bother you in any means.

I doubt anyone will be patience enough for letting their profits to run up to 100%. Because, when you are seeing your positions are into profits then probably you will be getting emotions and then you might be going for booking profit as early as possible which is the reason most people are not getting balanced risk-reward ratio.

[carlfebz2]

Crypto is known to be a volatile market and it's difficult to achieve good risk to reward ratios in such a volatile market.
I personally aim to get a 1:3 risk to reward ratio where if I am losing $10 then I set a profit target where I can earn $30 in the trade.
I change the strategy if I lose $30. This way you can keep trying different strategies until you start making profits.

Adjusting your parameters because you don't want to lose or you want to gain more is a factor that will take your account off. It is easy to achieve a risk reward ratio by setting our stop loss so that when there is volatility, we already know what we are going to lose and that is the only way we can achieve it.

Yeah, the role of stoploss order must be too crucial on balancing better risk-reward ratio. When you are able to cut your losses early and with the help of trailing stoploss, if you maximize your profits then obviously you will get  higher rewards against losing trades. For example, we need to cut losses at 5% or 10% but when we are sailing at market directions then we could try to cover maximum profits which may be even 100% hence if you face more number of losing trades will not bother you in any means.

Stoploss would only be just relevant when you are really making out active trades or day trading but if you are really going for long term then better not to make use of it.Speaking of balance then its a must thing to consider because this had been always the set up when it comes to risk reward ratio.

Always consider out on having balance in between your decisions because not all is really good at this and once you do gain up experience then you would really be finding
the right decisions on regards with your investment if you dont let yourself to be greedy.

[pawanjain]

Stoploss would only be just relevant when you are really making out active trades or day trading but if you are really going for long term then better not to make use of it.Speaking of balance then its a must thing to consider because this had been always the set up when it comes to risk reward ratio.

Always consider out on having balance in between your decisions because not all is really good at this and once you do gain up experience then you would really be finding
the right decisions on regards with your investment if you dont let yourself to be greedy.

Long term holding doesn't require stop loss but it also doesn't require a risk to reward ratio as well.
OP is asking a strategy to maintain a good risk to reward ratio which means either he is doing day trading or short term trading or swing trading.
In all of these cases a good risk to reward ratio can only be achieved with the help of stop losses.

[Bhig Daddy]

I noticed that you had a tight to and a loose stoploss, and I believe that is where your problem lies. As a novice, I believed that this was the proper method of money management, but it turns out that this is not the proper or expert method of trading for profit. To make the most money, you should switch your technique to a tight stop loss and a loose profit margin so you can make more money and cut your losses more quickly.

[palle11]

To make the most money, you should switch your technique to a tight stop loss and a loose profit margin so you can make more money and cut your losses more quickly.

It is still risky with tight stoploss and a loose profit margin because you see the stop loss taking you out steadily and that will pull your capital down. I think the best way to tackle stoploss is putting it on support or resistance levels and by that you are looking more comfortable not to put stoploss just anywhere you feel.