Reward to risk ratio is easy to be forgotten when come to trading. Some traders claim that the reward to risk ratio is useless, while others believe that reward to risk ratio is the holy grail. I'm believe that if you combine reward:risk ratio with your trading strategy, it will becomes the most powerful trading tools.

While there still have myths around the reward:risk ratio

Myth #1: Using a wider take profit or a closer stop loss, so can easily increase their reward:risk ratio.

Sadly, the truth is this is not as easy as that!

By using a wider take profit means that price unable to reach the take profit order as easily. On the other hand, put a closer stop loss you will easily "wash out' from the market. You will increase amount of the premature stop runs.

Myth #2: Reward: Risk Ratio is useless

Although, the reward:risk ratio itself has no value. But if you combine with your trading strategies, It will improve your trading result significantly. If you never knowing your reward:risk ratio of your trade, it is impossible for you to be profitable trader and soon you will learn why.

Myth #3: Your reward:risk ratio is bad

If someone state that any reward:risk ratio smaller than 2:1 have to be avoid. Bear in mind this is very wrong! Because reward:risk ratio is depends on your own trading strategies, your own risk appetite and your trading performance. There is nothing like good or bad reward:risk ratios. Everyone have their own reward:risk ratio. There is no right or wrong.  

What others professional traders think about reward:risk ratio

"Frankly, I don't see market; I see risks, rewards, and money" - Larry Hite

"It is essential to wait for trades with a good risk/reward ratio. Patience is a virtue for a trader"- Alexander Elder

"You should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities"- Paul Tudor Jones

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