Free course · Lesson 14 of 14
Why losing trades are fine
You can lose most trades and still come out ahead.
| Trade | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Result | −1 | −1 | +3 | −1 | −1 | +3 | −1 | −1 | +3 | +3 | +6R |
Step by step
- Every losing trade costs 1R, because the stop is fixed. Every winning trade makes 3R, because the target is three times the risk.
- Take ten trades: six lose and four win. Six losses is −6R. Four wins is +12R.
- You were wrong more often than right, and you are still up 6R.
- That only works if every loss really is 1R: no moving the stop, no doubling up to win it back.
Remember: With 1:3 trades you can lose most of them and still come out ahead. Keep every loss at 1R and let the winners reach their target.