Pharaoh
Brigadier General
- Messages
- 20,307
In addition to leverage, a proper money management is quite important. The trade must have a risk / reward ratio of at least 2:1 at the opening time.
Everyone focuses on that magic 2:1 risk reward ratio, but it's not really the ultimate key to profitability by itself.
Imagine system that always has 2:1 and it loses 75% of the time. That means for every $2 earned, $3 are lost.
Now, imagine a system with a 1:2 ratio and it loses only 25% of the time. For ever $2 lost, $3 are earned.
I suggest starting out with a system that's at least 1.:1 with at least 50% winning trades. Then see what can be done to either improve either of those numbers to take the system from breakeven to profitable.