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| negative pips - positive result |
Is it possible to do that? YES IT IS!
But only with a constant risk-percentage-factor (read the article "risk management")
Here is an example:
I lose a trade with a 200 pip stop-loss and a 2.5% risk factor.
The result: -200 pips / 2.5% loss of capital.
Then I have a positive trade with a 50 pip stop-loss, also traded with a 2.5% risk factor. The trade reaches my take-profit which was 100 pips out.
The result: +100 pips / 5% gain.
This example shows how important it is to thoroughly evaluate the risk and calculate the lot size properly for each trade.
In this scenario I show a loss of -100 pips (+100 -200), but at the same time I show a 2.5% capital gain from these 2 trades. |
On most major entry signals we use a maximum risk-factor of 2%. Occasionally there is a combination of 2 major entry signal, when we increase the risk-factor to a maximum of 4%.
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We use a maximum of 1% risk-factor for minor entry signals, sometimes less and sometimes up to 2% if there is a combination of 2 minor entry signals present in a price-bar combination.
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