When entering a trade its good practice to decide upfront where you will exit the trade – both on the winning side and the losing side.
The risk reward measures how you actually perform against these stops and targets.
If your win rate is 50%, then the same size (risk:reward of 1) winners and losing trades will get you to break even.
Smaller win rate means you need a higher risk:reward and vice versa.
As you build up trading experience, and adjust your discipline, revisit the PlayMaker trading plan to recalibrate the best levels for you.
This infographic lets you see different outcomes. The goal is to avoid the Danger Zone – combining a low Risk Reward with a low Win Rate.
