A trader's core edge is asymmetric risk-reward. He requires every trade to have at least a 2:1 ratio: if your stop loss costs $100, you need to make $200. With a 2:1 ratio, you only need to be right about one-third of the time to break even.
The beauty of trading, right, is asymmetric risk reward. All of my entries is part of my checklist. The risk reward has to be a minimum of 2 to 1. So if I see this form, but like, the stop is really wide and I'm saying, okay, well the target, it's only going to be a one to one, that's no longer a trade, even though it ticks all the other boxes. I need a minimum of 2 to 1. R to R. This is because you only need to then win 33% of the time, right? So if you can win one out of three trades, you're breaking even. If each trade is two to one.
