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Anonymous
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Yes I agree with Petko on large stop loss and small take profit being able to work well.

Your logic is reasonable, however remember it is the average winning trade / average losing trade x the probability of winning that is important.

For example what would you prefer:

Strategy A: 1:1 stop loss or take profit ratio with a 60% win/loss ratio

Strategy B: 2:1 stop loss to take profit ratio but with a 80% win/loss ratio

Let’s use 100 dollars risk as an example;

Strategy A should make 10 trades and win 600 and lose 400 which will mean 200 profit with a profit ratio of 1.5

Strategy B should make 10 trades and win 400 and lose 200 which is also 200 profit but has a profit ratio of 2

That example is only expecting a much smaller relative increase in probability of winning against a halving of the tp/sl ratio also and still outperforms it.

The probability of the trades winning combined with the risk to reward ratio of each trade is what’s important.

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