So using a reward:risk ratio of 60:40 makes the losses smaller than the wins. Can I lose even more and still breakeven? Imagine a trading system where you could be wrong 70% of the time and not lose money!
Well here we could focus on those trades that are initially profitable but then go to the stop. We cannot take the initial, small profit because we don't know if it would have subsequently gone to our profit target. And snatching profits early is not good for a long and prosperous career in trading.
We could however have a stop that follows price: if the initial stop was at -40 and price went to +10, this would move the stop to -30. Trailing stops like this further reduce the size of the stop. Not all losing trades reach +10 first, so getting to 70:30 is unlikely with this method but certainly the risk will be reduced to somewhere between 30 and 40.
Morty Sill
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