Ever wonder why a 1:3 Risk:Reward ratio is so prevalent as a rule of thumb? Ever since I’ve been reading about day trading, I’ve heard people say they ideally look for at least a 1:3 ratio, even they’ll settle for 1:2. In this article I’ll talk about how you can derive this value from the expectancy equation. Further, I’ll show how you can predict what kind of Risk:Reward ratio … [Read more...]