shaileshm wrote: Mon Jan 03, 2022 10:41 pm Probably it doesnt matters much whichever system you choose as long as its profitable. But I guess i will go for a lower DD just because it will increase your overall confidence as a trader and also as a person.

drawdown is not set in stone. when I said "higher DD", I was just talking about the raw strategy. you can lower DD by lowering the lot traded, but it affects also the profits obviously. Also I supposed that DD will be higher, because if trades have more profit, there will be also a higher DD, (trades will be longer in duration, thus will wander more before closing in profit, leading to a bigger DD)

ionone wrote: Mon Jan 03, 2022 11:13 pm drawdown is not set in stone. when I said "higher DD", I was just talking about the raw strategy. you can lower DD by lowering the lot traded, but it affects also the profits obviously. Also I supposed that DD will be higher, because if trades have more profit, there will be also a higher DD, (trades will be longer in duration, thus will wander more before closing in profit, leading to a bigger DD)

Well in that case i would look for ratio of profits/drawdown, and go for the strategy which has highest ratio.
My personal experience is that mental wellbeing is most important especially when trades a negative. A mood swing in case of loss will lead to further martingales, revenge trades, repeating bad trades etc which needs to avoided at all costs.

I rarely use automated trading, so my opinion isn't based on a lot of experience in that regard, but I'd say I prefer more trades.

I'd say more trades, although I could also see the point of having fewer better quality trades. I don't usually deal with automated trading and trade manually, so I may not have the best outlook here but I do see the value of diversification.

My answer to this question applies to manual trading or automated trading. The math is the same. The only difference is in manual trading you have to account for human emotion. But if you understand the math behind it, then emotions won't affect you as much.

Profit is relative. 100 dollars in profit is 10 percent of a 1000 dollar account but only 1 percent of a 10,000 dollar account.

So the aim wouldn't be more profit but a higher REWARD TO RISK RATIO.
2 reasons for this:

1. Higher RR per trade means you get to keep more of what you make because the spread/commission that you pay is smaller relative to your reward, percentage wise.
For example lets take two scenarios.

Scenario 1: Take one trade where you risk 20 pips to make 200, that gives you a RR of 10:1. The spread was 2 pips so you bank 198 pips total. That means the spread took about 2 percent of your total profits.

Scenario 2: Take 20 trades where you risk 20 pips to make 10 pips. Lets say you win all 20 trades and make 200 pips. Same as Scenario 1. But this time you have to pay the spread 20 times instead of just once. The spread is 2 pips and you took 20 trades, 20 X 2 = 40 pips. So you would pay 40 pips in spreads alone. Subtract that from your total 200 pips, 200-40=160. So in this scenario you would make a grand total of 160 pips. The spread alone would account for almost 25 percent of your total profits.

This is the major difference when trading small RR strategies vs big RR strategies. You are basically kneecapping yourself before you even begin. This is the reason brokers want you to trade smaller time frames. Because the more frequently you trade, the more money you give the broker for every single trade you take. And because it's incredibly hard to trade smaller time frames consistently with a large RR, most people settle for 1:1 RR or even less. That means that in order to just break even while trading a 1:1 RR strategy you would have to win half of your trades. Which brings me to my second reason I advocate trading high RR strategies.

2. Higher RR allows you to have a smaller winning percentage and still remain profitable in the long term.

If you trade with a RR of 5:1 you would only have to win 17 percent of your trades to break even. Anything above a 17 percent win rate is pure profit.
This means that you can lose 70 percent of your trades and still be profitable!

If you trade with a RR of 20:1 you would only have to win 5 percent of your trades to break even. Anything above a 5 percent win rate is pure profit.
This is a more extreme example but this means that you could lose 90 percent of your trades and still be profitable. How cool is that??

Now let's look at some examples where the RR is less than 1:1

If you trade with a RR of 0.5:1 you would have to win 67 percent of your trades to break even. Anything above a 67 percent win rate is pure profit.
This means that you would have to win 70 percent of your trades and even then you are barely profitable.

If you trade with a RR of 0.1:1 you would have to win 91 percent of your trades to break even. Anything above a 91 percent win rate is pure profit.
Again this is a more extreme example but this means that if you win 90 percent of your trades you are NOT profitable. If you extend this scenario indefinitely, you will eventually BLOW YOUR ACCOUNT. You can blow your account with a 90 percent win rate!

It's all about the math. Trading high RR strategies will give you a better shot at being profitable in the long run. Take small losses and big winners. This is the key. Sure you could lose 10 trades in a row but it doesn't matter because that huge trade is right around the corner and it will more than make up for your losses. This is the nature of trading. This is how you give yourself the best chance to succeed.

Higher RR or max RR so fewer more quality trades .
The more trades you enter the more broker fees/commission you will have .
Quality over quantity

More profits per trade is preferable to me

The thing is, the more trades one makes, the higher the chance to make a serious mistake. Then again, if you make multiple small trades, a single mistake shouldn't affect one's account so much.

mlawson71 wrote: Sun Feb 06, 2022 1:33 am The thing is, the more trades one makes, the higher the chance to make a serious mistake. Then again, if you make multiple small trades, a single mistake shouldn't affect one's account so much.

yeah right!
Placing less trades but the good ones is a better option.

i think there is a common misconception in terms of entries. Looking for entries all over the day makes no sense to me as it doesn't make more money. The mind set should be, ok, there's momentum, the direction is right and the run goes in my favour, now let's go for it and get the maximum out of it i.e. adding lots and lots and lots........till you can't see the background colour of the chart anymore.....just kidding. But I think you get my point.