Risk to Reward: Examples.

The following charts gives some examples of the importance of considering the Risk to Reward ratio when trading.

NB: I will update this page as examples present.

Monday 28th August 2017: Gold: Trading on a Monday with no scheduled news can be high risk but consideration of the risk per trade is also important as is the context. Gold had broken out above a 6-year bear trend line two weeks prior and the hold above this trend line was making the precious metal look rather bullish as it lurked under the $1,300 S/R level. There was a new TC LONG signal on both the 15 minute and 5 minute charts on this Monday morning. The Risk on the 15 min chart was 80 pips but the Risk on the 5 min chart was just 20 pips. Now, even on a no-news Monday, a risk of 20 pips is rather small and would have been worth considering. This trade ended up yielding a 15 R trade on the 5 minute chart and a 3.5 R trade on the 15 minute chart:

Gold 15 min chart: TC signal gave 3.5R:


Gold 5 min chart: TC signal gave a 15R trade:


Monday June 5th 2017: GBP/AUD: A new TC signal triggered with a trend line breakout BUT the size of the Stop required was too large to consider this a reasonable trade and so this was a TC signal that was best to leave.


Tuesday June 6th: AUD/JPY this example was on an RBA update day but I have posted this as an example based on the maths of the set up. The 4hr chart showed price action consolidating within a triangle pattern as below:


There was a new TC signal on the 15 min chart during the Asian session though and the Stop required for this trade was just 15 pips. There was sufficient room for this trade to move to offer a decent Risk to Reward profile and the trade did move the 60 pips down to test this trend line before finding some support. This was a 4R trade.