Trader Dale Volume Profile

Money management
There is one more factor, that
everybody seems to miss. It is the time
factor. The longer you are in an open
position, the higher the chance that
something unexpected will happen
(something will go wrong). For
example, the market could lose its
momentum, or there can be some
unexpected economic news that
completely changes the direction and
mood of the markets, etc... A lot of
unexpected things can happen. If you
stretch your PT too far to have
positive RRR, then the risk of
something unexpected happening is
bigger than if you used RRR for example 1:1.
Some people prefer to win often so they chose negative RRR (you win less then you risk). The
downside to negative RRR is that when you take a losing trade, it hurts bad (loss is much bigger
than your standard profit)
Some people like to have positive RRR – for example those who trail their positions and from time
to time take a big winner. The downside to this is that the strike rate is low and they need to be
very disciplined in their trading because the number of losing trades is high. It is not easy to stay
mentally okay when you have taken a 7th loss in a row...
I think that neither extreme is good. For this reason, my personal preference is RRR close to 1:1.
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