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I’m currently using a combination of Excel and Notion for my trading journal, but I’m unsure whether I should base my R/R on the initial risk or my actual risk when assessing my performance at the end of the week.
The challenge with using initial risk is that it’s tough to achieve a 2:1 R/R ratio, especially since I often set stops far away unless I'm taking a reversal trade. On the other hand, when I base it on actual risk, my R/R seems almost too good to be true.
I’d appreciate hearing your thoughts on what you all use as a measure. I’m trying to identify my weaknesses, such as whether a low R/R is dragging me down on pullback setups or if it's an issue with reversal setups, etc.
Regards
Hi Joshua,
If you are setting wide stops, and allowing them to be hit, you need to use that as your risk parameter. But if intending wide stop as safety stop, and then running on an actual risk stop you can use the latter.
If using the tighter stop you really ought to move actual stop so as not to rely on a mental stop that in reality you may not actually exit on. Ensure these kinds of errors are not being overlooked in your analysis.
Hi Richard, thank you for your reply.
If using the tighter stop you really ought to move actual stop so as not to rely on a mental stop that in reality you may not actually exit on. Ensure these kinds of errors are not being overlooked in your analysis.
To clarify, do you mean that I should move my actual stop by placing a stop order? Because when I take a trade, I always place a stop order along with it & do you mean that I should very quickly trail my stop to maybe the signal bar if the market moves in the direction of my trade?
Regards
I kind of use a hybrid. I have my RR based on initial risk, but I also don’t let my initial risk get hit most of the time. So I have a separate number that I look at in my journal called realized RR. I calculate that by comparing my loss amount to my win amount on every trade.
Thanks for sharing Kevin, I think I will do the same as track both. I'm trying to keep track so I could see how I am doing
