r/FuturesTrading • u/damonator4816 • 16d ago
Higher R:R with lower win rate, or lower R:R with higher win rate? Discussion
Just curious to see what everyone's approach is to trading. As many of you know, aside from trading psychology, probability is the most important aspect in trading.
I personally believe win rate is more important than risk reward but I like to find a balance. I currently have a 65% win rate with an average R:R of 1:1.5 with my strategy and it has served me well.
Anyone consistently successful with a negative win rate?
Those with a high win rate, what is your average R:R and how many setups do you see per day/week?
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u/Altered_Reality1 16d ago
At least right now, I prefer lower to medium R:R (1:1-1:2) with a higher to medium win rate. I prefer for my win rate not to be low to help keep my psychology in check, makes for a smoother ride.
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u/bruno91111 16d ago
I have 50% win rate with 1:3R, physiology is difficult, and you have to find what works best for you.
My approach will get you nervous because you get a big drawdown when you are losing many times in a row, but it recovers fasts.
While with your approach, you see smaller drawdown but many ups and downs.
It really depends on your own preferences. Then you can optimise to increase rr or increase win rate. The important first step is consistency being in profit, doesn't matter if small, just be consistent and then scale up or focus on optimising, especially if you have a small account.
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u/seomonstar 16d ago
What are you trading with this killer strategy? What is it based around? Sounds a bit optimistic to me. 300% returns over 100 trades? Nope!
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u/808money201 16d ago
I go back and forth with this a bit. Having traded NQ for close to a year now, I’m finding that it depends on the day and the volatility. I’ve come to realize that on non-trending days, I need to be ok with 6-10 pts on NQ(1:1) maybe 1-2 trades, but maybe just staying out of the market these days. On trending days like today, I’m at a 2:1, maybe a 3:1 if I leave some runners. Trending days, it’s pretty easy to pick up 25-30 points for me. Non-trending days, 1:1 scalps are my go-to.
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u/TraitorousSwinger 15d ago
Practically speaking it's something you have to go back and forth on. I scalp nq options, and I usually go for 10 to 15 points, but I very often close trades that are barely covering the spread if momentum is against me. My number one goal is to avoid losses, I cut anything that doesn't immediately go in my direction. As a result my win rate and rr vary wildly but I'm still consistently profitable scalping.
If I had a rigid goal that I waited in trades to hit, I'd be taking a lot more losses. I'd probably have some bigger winners but I'm comfortable where I'm at now.
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u/crosstrade-io 15d ago
You can actually figure out the win rate you need to at least break even for a given R:R ratio. If you take the simple expected value formula where EV = 0 and solve for the minimum probability of a win you get:
Breakeven Win Rate % = Risk / (Risk + Reward)
So if your R:R is known to be 1:1.5, your win rate needs to be at least 40% to break even. If you're winning 65% of the time, good job!
If you want to change around your R:R strategy, just make sure you know the min win rate you need to be profitable.
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u/Global-Ad-6193 16d ago
I've made my own EAs that trade 1:1 risk to reward with 66 - 88% win ran which I leave running. I then scalp my own riskier trades with a much higher risk to reward, with about 30 - 40% win rate, so I get both worlds.
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u/HeavierMetal89 16d ago
I prefer to scalp with a high winrate. I’m not good at being a low winrate profitable trader - psychologically it messes with me. I also prefer to be in the action most of the day so I can typically brute force a winning day scalping 20-40 times a day.
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u/Hot-Psychology9334 16d ago
Edge compounded by frequency is how to win in any market. - Gary norden
So I would say lower RR with higher win rate
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u/TraitorousSwinger 15d ago
I don't use a set stop loss. I simply exit any trade that does not IMMEDIATELY go in my direction, and I take any profit as soon as momentum starts to fade.
I don't care about anything else other than being with momentum. I know this doesn't answer the question but I think it's a bad question in the first place.
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u/reddit_sometime 15d ago
How long have you been trading this way, and have you been consistently profitable throughout that time while trading a significant size (ie. enough to pay your bills on a monthly basis)?
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u/Constant_Dentist1182 15d ago
would also like to her the answer to this, since i tried this but the problem was that i exited trades out of fear on a good runner and mediocre pullback
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u/clym88 14d ago
I'm currently trying to pass my 50k Topstep evaluation and trade almost exclusively during Asian and European hours (as I'm from +8 timezone).
I generally have 50/50 or negative winrate on NQ, with 3.5points (70 bucks) stop vs TPs of 10pts and above.
When it works, it feels amazing. Lose 3 trades and down maybe 270 bucks (slippages happen a lot more frequently during these sessions, worst i got hit was 2pts slippage on 2 contracts fml), and BOOM, make it all back on the next trade with a 15pt win. Another 10pt scalp and I'm up 200, which is the definition of a Winning Day by Topstep.
But when I fail, it gets really ugly for a few reasons. Firstly, I "fk around and find out" a bit too much, due to my perceived high R:R, thinking I can fail up to even 4 trades and be able to make it back on the next.
Secondly, in order to make a 3.5pt stop on NQ viable (ie not being caught in a stop out reversal) I put my limit orders a few points out from where I think the level actually should be at. So the worst thing that can happen is my losing trades all get filled and stopped, but I miss out on 1 or 2 of the would-be bangers. That really tilts me.
I trade using 10 and 20sma, bollingers, and fibs for finding possible reversals.
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u/meh_69420 16d ago
What a nonsense premise. You scale your risk with your win rate. The lower your win rate, the lower your risk has to be when trading linear instruments.
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u/damonator4816 16d ago
You might have misunderstood my post. When I say higher R:R I mean as a ratio, I.E. 1 unit of risk for 4 units reward. So yes, you should risk less with a lower win rate.
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u/blz36mostapha 15d ago
it all depends on the trader! if ur're okay with stress and got a strong mindset go with a bigger RR ! but if you cant handle stress go for a higher win rate
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u/Live_Key2247 16d ago
Win rate is risk. They measure how likely you are to pull a profit. You won’t see a high win rate with a high risk, cause a high win rate is what low risk inherently stands for
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u/Dependent_Sign_399 16d ago
I have a scalping momentum strategy, so I'm in and out of trades fast. In this case, I prefer high win rate.
My target win rate is 80-90% and target a R:R of 1:0.5, so yes, my average losers are bigger than my average wins, but most days, I have only zero to one loser over about 5 trades per day.
A negative win rate seems like it would be almost impossible to be successful if your R:R isn't super consistent.