The document above is one of the most important PROOFS in trading. Once you understand this and are able to apply it consistently, your trading will change for the better. I guarantee it. But you have to be disciplined and diligent to apply it. No random trades. Diligent execution of Edge only.
You have read on this blog, me, going on and on about the importance of having a Setup, an Edge, having Rules to trade, the importance of Patience. But today I want to speak about something that is equally important as having a Setup, Edge, Rules, or Patience in trading.
It is R:R R.
Risk:Reward Ratio
This might be the most important of all the pillars of trading.
I’ll call it R:R or R for the sake of this post.