RISK : REWARD how important it is
Look on 1 thing - that wont be a rule in market behavior but its better for odds in trading. I gave v close SL. More logic Stop Loss was below last low and all this support levels i show in analysis.
But first: SL would be about 12pips bigger (that would make make my 7pips SL 170% bigger!).
Second it could be broke anyway (and after breaking "big" support move is more rapid = more slippage on ECN/STP broker).
What i said just after opening position that i can still re-open it. Even higher.
And now we have AUD/USD position. I do almost exacly same thing. Tight SL. After it was broken i just wait for another signal and re-open position. On higher level than SL. But only thing i can do just after opening position is make my risk and potential risk:reward ratio best as possible.
With 7-12pips SL 50pips profit makes reward 4-6 times better than risk. With 20-30 2x. What higher R:R gives me? I can be wrong in 70% time and still be profitable. Of course im doing what i can to be 60% profitable but i get this comfort.
Like on last Thursday when i had 3loses and 1 profit. I had 25% efficiency - but I earned 54 pips and lost 27. So even with 25% (thats not good ;) ) i earn in 1 position twice more than i lost in 3.
Thats the power of good Risk:Reward and comfort that i can be wrong but still earn.
And some movie: http://www.youtube.com/watch?v=DZNr6WSidFw
Of course from movie just about losses. Rest is well v nice and making us Gods - and its best way to loose money.
