How Do You Find Trades With a Good Risk to Reward Ratio?

in this video trades we’re going to look up how do you find trade or the good risk of water ratio stay tuned

hey guys a very warm welcome to you all right so risk reward ratio as you know or maybe you don’t know is key so we really want to find trades we’re risking a wand to make three for example that’ll be a reach one reward ratio and that’s a higher thing we want so if you’re risking you know let’s see risking 100 bucks you know you wonder you’re making 300 bucks plus so number three to one risk order ratio you’re making 500 five to one etc you get the idea now the reason this is so good is that you can afford to be wrong a lot of time but still make money so we want trade of the high risk reward ratio now the the trap that we can’t fall into as traders as we go right I want a high risk order ratio I’m going to look at this trade here we go we’re finding some support here oh great you know I want to buy a support here I’m gonna have a stop under here and I want to target here that gives me a nice ten to one risk or ratio the trouble is is that you’re just literally deciding risk reward ratio based on how you want to what you want to achieve so you reverse engineering it so say okay I want to have 10 to 1 all right so my stop is gonna be here and by the way guys you know stop you know should be in a sensible place we’ll get to that in a moment but let’s see what’s pop you see you’re saying all ten times that makes my target here so I want to hit that target you know by tomorrow and you never hits it because the markets are never gonna suddenly change the way that it acts it’s not going to suddenly have a massive volatility expansion not just because suddenly come up and hit your target so there’s a pie in the sky you’re just stabbing and going you know what I know let’s have a good reward ratio well I’ve got a hundred to one you know my targets up here you get the idea guys you know you don’t we can’t force the risk Ward ratio that you want you have to look at the trade that are setting up and then see if it has the right risk reward ratio for you so how do we do that how we find these trade so the first thing is we look at the stop position and we say right we’re logically has the stock got to be for thesis of the trade to be negated in other words

is the trade no longer valid so if we were buying this as support great example if abundance of support here okay we’re okay we probably say well if it goes under support then I’m gonna be out but you don’t want it to close otherwise you’re gonna get tagged by a wick so maybe you’ve already had a week let’s see fragments that you’ve already not pulled back here and it’s back up you say okay well if it goes back under that wick under the support I’m out whatever that made me imagine those 50 pips right that’s 50 pips ago okay so there’s my tiny trading Forex 50 take 50 cents whatever you marketing soda try 50 pips right now you go okay now how do I work out what’s going on so my stop is the first port of call you know I have an anchor point that’s my risk and by the way that monetary amount then comes down to how much you’re training your train to pound a pip you’ve got a hundred dollars risk there to power two hundred pounds risk and switching currencies in my mind you get the point frame two dollars a pip etc so you can say right that’s my risk it’s a hundred pound going back some $100 here risk and it’s 50 pips so I have to do two dollars a point if I’m using to spread bang or whatever it is so fine now the next part of it to see if this trade is still valid is to go right I need at least the three two one to take these traitors on one taking anything less where is it going to go to right so you start to then extend it and go there’s you know there’s there’s one two one there’s two two one there’s three two one and you’re right that’s where I knew really need my thing because that’s 50 pips it’s 100 pips I’d be 150 pips so I really need that so the minimum I can have is going to be there now is that feasible on this chart it probably is because you could say you know what actually if that support holds I would expect us to break above the high and I’m not asking for much I’m not asking for here straightaway and there’s nothing wrong with that but just with the context of what you’re given or the context of what we’re given in this kind of example chart I’ve just scrolled on here guys is that yeah you know what if you broke through that resistance level and pop through with a day of aggression which is normal market conditions you probably get you 100 50 so which case you go yeah I can take this tray it takes my boxes it makes a lot of sense now if we imagine this same scenario let’s just rub some of this off and go

a bit of a dirty whiteboard finger here imagine this same scenario was here you know we did this all of a sudden we go roll a/c off stop has got to be here really because we’re trading off that now that might be 150 okay well if you want three two one what do you want one 450 pips return there 150 300 950 we need 450 back where’s that gotta be well reality there’s a 150 is our 300 ah we’re actually where we were before right up here now what’s the chances of price getting to that in arts high frame expectancy of course price can get to that over a long period of time we’re not saying it hasn’t but in the rules of our expectancy I’m saying okay what’s a five-day period there you know would have to continue on is it feasible it’s probably not it’s probably not feasible for us to take that trade and expect the three to one we’re probably going to take that trade in it we still have the same target and it’s not enough you know it’s only giving us two to one they’re always giving us one-half to one or whatever that number may be so we then look at another charm we go right well where can i express this trade with the least amount of risk possible and the most sensible an obvious

reward position you know because then we can start to really pick the trades at work because we can’t force the market to give us the pattern that we actually want I can’t force it we can coerce we can jump the gun we can make mistakes and go well actually I’m going to put my stop here I’m gonna but we we should be wrapping our trade around what the pattern is showing us if it’s showing there’s a nice little whip the downside that pops up and it’s a shallow wick and it’s done that and it’s past the Pride Day or whatever and great we take that and now we look at the target is it feasible that we break the hive we’ve done a fatal blow here very feasible you know he’s a feasible that we rip up and I’m gonna hit that and next day probably not couldn’t shut up there could it chuck up there in the next couple of weeks it could do but then again is that in line with what we’ve seen has happened so thinking about you know what the chart is showing you and hunting for those so you know the way to hunt for them is to have your strategy in mind whatever that may be have real stop idea in mind let’s say you’re buying a double bottom so he was scanning through your charts you’re looking for the bottom they’re looking to see how much is the risk on the tree

okay any ride boarding and saying how is my price target where can i price target be okay is that no no no next next next so you’re always looking at your stop first and then your feasible price targets second and that’s how you hunt for this high risk reward ratio trades now you might ask well what’s the strategy for that was the operational tactic for doing that that’s gonna be different than what market you’re trading if you’re trading and praying a basket for Forex pairs should I say you’re asking us to scroll through another 10 20 pairs you should scroll through use eyeball if you’re trading shares or stocks you probably have a screening system to bring them for your attention and that may well be something like their all-time highs they’re away from the moving average they’ve got this they got that and that’s one of it personal to you and God has done videos we’ve talked about that before actually in the price action program literally recent update a final module or the last module so far on there is talking about hunting prey and we talked about a whole screening process and how we kind of look these things but regardless with each right now or not the point is that you you know you’re looking through and just seeing where stop is and then extrapolate you know and go hey is that gonna be a sensible target because the trap you fall into again is we force our target onto something that’s never gonna be there and that Marv again got to run the trade got her on the tray got to run the tray gotta run the tray we’re told to run our winners and of course we’re expecting too much the market goes up a little bit comes back and then it’s in a completely different scenario so it comes back does its thing and then you know from here onwards it’s seven different phases in with different phases that was the move you know you should have wrapped that and really when it was up there that was their trait to take but now it’s a different phase it does what it wants is a different type of trade so bear that in mind guys rich Cordray shows super super key take care of see next one

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