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When calculating minimum profit target, do we use 2x Initial Risk or 2x Actual risk for the trader's equation to work?
Initial Risk is the risk when we decide to enter. I simply plan and manage my trade by it.
We'll know the actual risk after seeing the next bar or two. It is too less for a swing trade. If I swing, that means I will hold for about 1-2 hours on 5-min chart (but not always).
Holding for 2x Initial Risk when entering late in the trend is an important issue. You have to remember that when your probability is better, your reward may be worse (but not always). Other traders might be looking to take profit at their target soon, not far from your entry point.
Sometimes I got my 3x Initial Risk or more when I entered the low probability trades. I think it is necessary to get more than 2x Initial Risk in some trades, especially if I was stopped out more often because I used a tight stop.
Dear Vorakan Thangsurbkul,
I read your post and then I post another post about take profit.
The reason is even you make use of 1 time x initial risk to take profit, you enter the market by H2 /L2 signal bar, you may not possible to close the position with profit in bear/bull trend.
In bear trend, I will stop gain/loss when 1 point below L1 signal bar after I enter the market.
In bull trend, I will stop gain/loss when 1 point above H1 signal bar after I enter the market.
Regards,
Steven Ma
