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APeng: Hi guys I got a simple question: How to calculate your average return? Given is ratio of successful trades (ratio): 60% risk per trade (risk): 5% risk / reward ratio (R): 2 My try: ratio x risk x R – (1ratio) x risk 0.6 x 0.05 x 2 – (10.6) x 0.05 = 0.04 = 4% Am I right? No. Those figures would give an average loss Out of 100 trades you would have 60 winners risk / reward ratio (R): 2 and risk at 5% means that each winning trade would return 2.5% Total winnings= 60 x 2.5 = 150 The 40 losers, all losing 5% would result Total Losses= 40 x 5 = 200 Net result over the 100 trades would be 150  200 = 50 So average per trade will be 50/100 = 0.5%


GumRai:
No. Those figures would give an average loss Out of 100 trades you would have 60 winners risk / reward ratio (R): 2 and risk at 5% means that each winning trade would return 2.5% Total winnings= 60 x 2.5 = 150 The 40 losers, all losing 5% would result Total Losses= 40 x 5 = 200 Net result over the 100 trades would be 150  200 = 50 So average per trade will be 50/100 = 0.5%
Thank you for your answer. I meant with a risk / reward ratio that brings a profit that doubles a loss. So, to be mathematically correct, a win / loss ratio of 0.5. Out of 100 trades you would have 60 winners risk / reward ratio (R): 0.5 and risk at 5% means that each winning trade would return 10% Total winnings= 60 x 10% = 600% The 40 losers, all losing 5% would result Total Losses= 40 x 5% = 200% Net result over the 100 trades would be 600%  200% = 400% So average per trade will be 400% / 100 = 4%

I got a simple question: How to calculate your average return?
Given is
ratio of successful trades (ratio): 60%
risk per trade (risk): 5%
risk / reward ratio (R): 2
My try: ratio x risk x R – (1ratio) x risk
0.6 x 0.05 x 2 – (10.6) x 0.05 = 0.04 = 4%
Am I right?