rare win percentage is 70%. But working out the math, 7 winning trades at 30 pips, nets 210 pips profit. Losing 3 trades at 20 pips per trade is 60 pips loss. The net profit for ten trades is 150 pips. With one contract, this is $1,500.00 or one mini-contract, this is $150.00 profit per ten trades.
This shows that even with only 50 % wins, money can be made. Using a 3:2 profit loss ratio is profitable for making money in trading. This could mean using a 60 point target with a 40 point stop loss as well.
Using a smaller ratio like a 30 point target and 30 point stop loss, a 1:1 ratio will only give a profit with a win rate greater than 50%. You may find that your trading strategy can only get a 20 point target so you may need to do the 1:1 ratio. Using the 3:2 ratio, with a 20 point target, you will have less than 20 as a stop loss and this is too small of a stop loss for trading. There are so many market forces that can swing more than 20 pips and hit your stop loss. Practically speaking, you need to work with the currency pairs with the smallest spreads when using a 20 point stop.
Now, knowing the right target loss ratio, the right trading strategy needs to be incorporated to make this work. Finding the right strategy is vital to this ratio.
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