A plan for money!

The first thing that should be done when trading is having a plan of attack! The strategy is to look for exactly what you know works. You find the cues of your strategy and make sure to not deviate. You take the trade and at that point you should accept the fact that it might make you money. It might, it might not. At the end of the day your trades consist of winners and losers. How does one make money?

There is a probability that your trade will generate profit. After many trades you should see, that the winners have made an RRR of any amount and combined with your win percentage this could be profitable because the absolute winnings will outweigh the absolute losses. In theory one could have a 1% winrate and still make money because the trade that does succeed generates more money than the losses. It is the combination of the Rewards you make and Risks you take with you win percentage that generates money. You could search for 1:100 RR trades, but the chance of a trade succeeding will be very low. Take the SPX for example, you are betting money on the fact that it could move a 100 points up, before it would move one point down. The chance of that happening at the exact moment that you execute your trade is very slim. Keep in mind that the bigger RRR you search for, the lower your winpercentage gets!

I hope this piece clears up about how the RRR system works.

Comment:

I forgot to comment about the whole picture itself. This is an example trade of a spring. This is the strategy I trade, it is a test of previous lows. It is testing the need for selling, and selling pressure. When there is no selling pressure, the price has room to go up. In this case one should look for tests of the spring. Those could be higher lows or even lower lows. And one should buy when the test occurs, the candle itself would be printed black and you step in. The moves are mostly fast pops to the upside, you would reach for targets that are previous highs. You could ofcourse catch bigger trades by looking at bigger timeframes too.

I hope this reaches you well, leave a comment for any questions! :)