I trade with a negative 1:10 and currently on a 43 winning streak compounding my account in every trade, never ever going to trade the “traditional” way of a “good” RR
My winning streak finally ended lol to 57 wins in a row before that loss, did I make profits of course I did 🤩 I currently use a personal discord to journal all of my trades, I might open it up for everyone later on
an insurance company risks 500,000 dollars to take your 2,000 dollars. a casino risks 100,000 dollars to take 10 dollars off you. it works in real life.
After your last video on the subject, I embraced the approach that I'd been talking myself out of for so long. Brief backtests (in a python backtesting program I've written) are giving VERY good success rates for a strategy that, in a "regular" R:R approach, was just average. To really go to town on the backtesting, I'm (as I type) running a deeper test on all major fx pairs, and on 6 different timeframes. However, I've added a sprinkle on top; For every timeframe, for every pair, I've made 50 additional Monte Carlo simulations. Therefore, by this evening, I'll have some solid numbers to know, absolutely, if this approach works... And the backtest will be for 8400 datasets. A total of just over 2.6 billion rows of OHLCV data. Let's see how we go...
Testing completed! Using the "good" risk to reward gives (for my strategy) a range of around 45-50% win rate - essentially a coin flip. Switching to a "bad" risk to reward is changing that same strategy to a 79.7% win rate average. The return percentage also increased, likely because of less losers (even though the losers are losing more than the winners are winning). Bear in mind that this is over 17 years of fx data, and is confirmed with the THOUSANDS of Monte Carlo simulations over the same periods. I'm sold. This is absolutely something that will be building a trading system for, for forward testing on a demo account. Again, thank you for the video... great stuff.
Great way to clarify this common misconception, Scott. I get this question so many times it's crazy. 1) High win rate, bad risk to reward ratio 2) Low win rate, good risk to reward ratio Both can yield the same level of returns. Based on my observation, most retail traders find (1) more palatable, because of the loss aversion. It feels better to have consistent wins and occasional losses (albeit larger ones on average), as opposed to a string of consistent losses with larger average wins. For systematic traders and investors, this becomes less of a problem as you eliminate emotions from the equation altogether, regardless of the model that you trade. It's good to have both models (1) and (2) in one's portfolio!
I have been back testing this and this is absolutely superb With hedging used for you stop loss you litreally come out with a profit or break even pretty much every time Thank you so much for this video
If I have a choice, I almost always pick the system that trades less. The systems I've tested that trade more than 1x per day have not been as good as the ones that trade 1x or not every day.
Hi Scott, thanks for the video. I want to ask you about stops, I'm currently in a dilemma on whether to automate my stops to BE or leave it alone, I recently adopted a move to BE once price reaches 5+ points on $ES but I've been getting stopped for nothing or missing out on alot of profits because of this a LOT. What do you recommend me to do in terms of trade management?
Hey Scott, just wanna say I enjoy your vids, both the content and the style! As this week was a losing week for this strategy, would that theoretically make next week a better than usual starting point?
Yes, when you're dealing with a high % strategy, it's always good to consider starting after a loss. Nothing is guaranteed, of course, but it puts some nice probabilities in your favor. And thanks!
I have tryed many things - for my automated ideas, the ONLY ratio that makes money is 0.5 to 0.4 rr -- I only care about profit , so the rr means nothing to me - only what works.
Ive gotten thru 5 Funded accounts with a Negative RR im not sure why but a positive seems like you actually need to be more accurate and have an even more precise understanding of the market to pull off these 1:3 , 5, 10 reward ratios. Never fun sitting around waiting for that to happen. 🤣
Thanks for the video! It would be interested to see a backtest of the same strategy you shared but with a "good" reward to risk like 5 to 1 or even 10 to 1 for comparison.
Are both targets and stop losses fully held towards their respective targets? Or can trades be manually exited if you believe trades aren't going your way? I'm trying to collect accurate data for this. Thank you.
People dont also know spreads and commission makes the losses much bigger while it eats up ur account over time. When you make the big run. It won't even be significant.
The lower the reward to risk, the higher the odds of winning. There would most likely be a limit, but even at a 1:0.6 risk to reward, you should get a 70% win rate AND more trades. Due to less losing trades and less losing trades in a row, causing less draw-down and many more wins, your trading psychology would be in excellent shape. You could easily use more of your capital and find more trades per day. If you had a $10,000 account for day trading and only made two trades a day, that would be 40 trades per month. If you used 10% of your account ($1000) per trade with a 70% win rate at a 0.6:1, you would make $4,800 per month or 20 trading days. Many can make 60 + trades in a month. We already know that with a 1:1 win/loss, the return is about 55 to 65 +%. I would be inclined to speculate an 75% win rate at a 1:0.6 win to loss ratio.
@@ianbrown5955ok so if u loose three trades in a row..which is quite possible and happens with everyone.. so ur down 30% now.. ho r u gonna cover that?? 1:06?? This strategy is crazy bro😂
@@Vijaysharma39333 then you lose whatever you risking. If I risk 500 , I can make $250 with bigger stop loss. I’m just trial and error at moment. Currently using 1:3 risk
@@Vijaysharma39333 SL would be able to take up some of the slack in the risk. This is one of the reasons that many trades fail. But also, many trades fail do to the fake before the fall; you would catch many of those.
The losses are almost never 13x. As the video says, there is a time exit so most losses are much less than the big emergency stop. That's how the math does its mathing.
I swear, Scott is one of the few traders that I agree with on everything he's put out and I have watched his videos for a while now.
I agree!
@@scottwelshstrategiesdo you… lol
😂@@scottwelshstrategies
@@scottwelshstrategies lets agree to agree , jk , but yeah one of the few people talking about the powers of negative RRR keep the videos coming!
@@merovingianv3462 Agreed!
I trade with a negative 1:10 and currently on a 43 winning streak compounding my account in every trade, never ever going to trade the “traditional” way of a “good” RR
Love it!
bro u got discord am doing the same and going crazy tbh
My winning streak finally ended lol to 57 wins in a row before that loss, did I make profits of course I did 🤩
I currently use a personal discord to journal all of my trades, I might open it up for everyone later on
@@ShowMexicanoyMas Ha, only 57?? Great work!
@@ShowMexicanoyMas ye man i cant find traders with RR, and im doing hella winners inna row too n is crazy tbh
an insurance company risks 500,000 dollars to take your 2,000 dollars.
a casino risks 100,000 dollars to take 10 dollars off you.
it works in real life.
Adam Grimes learned to employ 1to1 and was testing a .5 to 1R with great success
After your last video on the subject, I embraced the approach that I'd been talking myself out of for so long.
Brief backtests (in a python backtesting program I've written) are giving VERY good success rates for a strategy that, in a "regular" R:R approach, was just average.
To really go to town on the backtesting, I'm (as I type) running a deeper test on all major fx pairs, and on 6 different timeframes. However, I've added a sprinkle on top; For every timeframe, for every pair, I've made 50 additional Monte Carlo simulations.
Therefore, by this evening, I'll have some solid numbers to know, absolutely, if this approach works... And the backtest will be for 8400 datasets. A total of just over 2.6 billion rows of OHLCV data.
Let's see how we go...
Testing completed!
Using the "good" risk to reward gives (for my strategy) a range of around 45-50% win rate - essentially a coin flip.
Switching to a "bad" risk to reward is changing that same strategy to a 79.7% win rate average.
The return percentage also increased, likely because of less losers (even though the losers are losing more than the winners are winning).
Bear in mind that this is over 17 years of fx data, and is confirmed with the THOUSANDS of Monte Carlo simulations over the same periods.
I'm sold. This is absolutely something that will be building a trading system for, for forward testing on a demo account.
Again, thank you for the video... great stuff.
Thansk for the numbers champ!
Are you saying bad risk to reward ratio is better?@@jeedub6142
@@jeedub6142 Hi Im all about that negative rr but Im so lost on which strategies would be good on it any suggestions?
Great way to clarify this common misconception, Scott.
I get this question so many times it's crazy.
1) High win rate, bad risk to reward ratio
2) Low win rate, good risk to reward ratio
Both can yield the same level of returns.
Based on my observation, most retail traders find (1) more palatable, because of the loss aversion. It feels better to have consistent wins and occasional losses (albeit larger ones on average), as opposed to a string of consistent losses with larger average wins.
For systematic traders and investors, this becomes less of a problem as you eliminate emotions from the equation altogether, regardless of the model that you trade.
It's good to have both models (1) and (2) in one's portfolio!
Well said, and I agree!
I feel violated every time Scott said “it’s bad, it’s so baddd” lmao 😂.
😂😂
Thank you for being honest.
I have been back testing this and this is absolutely superb
With hedging used for you stop loss you litreally come out with a profit or break even pretty much every time
Thank you so much for this video
Do you think trading less, such as once or twice a day, is better with negative RR?
If I have a choice, I almost always pick the system that trades less. The systems I've tested that trade more than 1x per day have not been as good as the ones that trade 1x or not every day.
Great video Scott! What's your top 3 books on trading ideas?
Cheers,
Raph
Kevin Davey has some great books and Perry Kaufman is exhaustive and knowledgeable.
@@scottwelshstrategies thank you, I'll check them out!
been doing negative Risk Reward and have been profitable 96%
Excellent. Just keep your worst losses under control and carry on!
Hi Scott, thanks for the video.
I want to ask you about stops, I'm currently in a dilemma on whether to automate my stops to BE or leave it alone, I recently adopted a move to BE once price reaches 5+ points on $ES but I've been getting stopped for nothing or missing out on alot of profits because of this a LOT.
What do you recommend me to do in terms of trade management?
Mentally, I love stops like anyone else. But, personally, I don't use break-even in any of my automated Futures strategies.
Hey Scott, just wanna say I enjoy your vids, both the content and the style! As this week was a losing week for this strategy, would that theoretically make next week a better than usual starting point?
Yes, when you're dealing with a high % strategy, it's always good to consider starting after a loss. Nothing is guaranteed, of course, but it puts some nice probabilities in your favor. And thanks!
Best trading Chanel!
I accept your assessment! Thank you!
I have tryed many things - for my automated ideas, the ONLY ratio that makes money is 0.5 to 0.4 rr -- I only care about profit , so the rr means nothing to me - only what works.
I absolutely love what you said. Only do what works. With any reward to risk ratio.
Ive gotten thru 5 Funded accounts with a Negative RR im not sure why but a positive seems like you actually need to be more accurate and have an even more precise understanding of the market to pull off these 1:3 , 5, 10 reward ratios. Never fun sitting around waiting for that to happen. 🤣
Interesting point. With positive reward to risk, you have to be perfect. With negative, you just need to be a little right, not all the way right.
The feeling of jumping back a big jump once a while gets people addicted
Thanks for the video! It would be interested to see a backtest of the same strategy you shared but with a "good" reward to risk like 5 to 1 or even 10 to 1 for comparison.
Hi, I just did a video on a strategy with "good" risk to reward. You can watch that here: th-cam.com/video/LdKvKolb8Wk/w-d-xo.html
Are both targets and stop losses fully held towards their respective targets? Or can trades be manually exited if you believe trades aren't going your way?
I'm trying to collect accurate data for this.
Thank you.
For all tests and trading, I held all positions until the target or stop was hit.
Is this system using ATR(14)? I saw the previous video CCI and ATR(14), is this the same system?
Thank in advance
The ATR on this one is higher than 14. I don't give away the details for this particular strategy but test higher than 14 to mimic my results.
People dont also know spreads and commission makes the losses much bigger while it eats up ur account over time. When you make the big run. It won't even be significant.
bad risk to reward is fine but you have to win alot there's nothing special about it, its hard to do as a trader
So is holding and losing your profit!
The lower the reward to risk, the higher the odds of winning. There would most likely be a limit, but even at a 1:0.6 risk to reward, you should get a 70% win rate AND more trades. Due to less losing trades and less losing trades in a row, causing less draw-down and many more wins, your trading psychology would be in excellent shape. You could easily use more of your capital and find more trades per day. If you had a $10,000 account for day trading and only made two trades a day, that would be 40 trades per month. If you used 10% of your account ($1000) per trade with a 70% win rate at a 0.6:1, you would make $4,800 per month or 20 trading days. Many can make 60 + trades in a month. We already know that with a 1:1 win/loss, the return is about 55 to 65 +%. I would be inclined to speculate an 75% win rate at a 1:0.6 win to loss ratio.
@@ianbrown5955ok so if u loose three trades in a row..which is quite possible and happens with everyone.. so ur down 30% now.. ho r u gonna cover that?? 1:06?? This strategy is crazy bro😂
Heya ive got a system and looking to trade 1:0.5, thoughts on it?
What about sudden fall and sl hit
@@Vijaysharma39333 then you lose whatever you risking. If I risk 500 , I can make $250 with bigger stop loss. I’m just trial and error at moment. Currently using 1:3 risk
As long as you test it, it sounds good to me.
@@Vijaysharma39333 SL would be able to take up some of the slack in the risk. This is one of the reasons that many trades fail. But also, many trades fail do to the fake before the fall; you would catch many of those.
Nice Title :-)
Wouldn’t you need like 93% win rate just to break even with 1:13 rr?
Kind of. But not really because this strategy has a time exit also. So most losses are not 13x.
Base hits add up
What do you say for the stinky ass twitter gurus claiming that they’re hitting consistently 1:3’s and 1:4’s with over 60% win rate ?
Ha, let's just say I'm, um, a little skeptical.
What do you use to do these backtests/simulations for these decades of data?
Feel like backtesting manually on tradingview isn't cutting it 😂
I use Tradestation for all futures/stock testing. I use MT4 with bought data from Tick Data Suite for Fx.
@@scottwelshstrategies thank you very much
You gotta crawl before you walk are you saying?!?! You thought of that yourself…
So you risk 13 to make 1?
In this particular system, that's what the testing shows.
@@scottwelshstrategies ok thanks for the reply
If you making 74% of income then why you selling courses ? I guess you are millionaire from trading
Trading is going well but I like teaching. So that's why I do videos. Nobody has to buy anything from me. Just trying to help.
90% winrate, 1 loss every 10 trades, but you lose 13 times more than you make… this is profittable? How? The math is not mathing.
The losses are almost never 13x. As the video says, there is a time exit so most losses are much less than the big emergency stop. That's how the math does its mathing.