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Risk Reward & Timing

Understanding Risk:Reward (R:R) ratios and timing your entries correctly is what separates consistently profitable traders from those who struggle. A good R:R can make you profitable even if you are wrong 60% of the time.

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Understanding Risk:Reward Ratios

Risk:Reward tells you how much you stand to gain for every unit you risk.

1:2 R:R = Risk 50 pips to potentially gain 100 pips
1:3 R:R = Risk 30 pips to potentially gain 90 pips

The magic of R:R: with a 1:2 R:R, you only need to be RIGHT 34% of the time to break even. Win 50% of trades and you are very profitable.
Win Rate R:R 1:1 R:R 1:2 R:R 1:3
30% -40% -10% +20%
40% -20% +20% +60%
50% 0% +50% +100%
60% +20% +80% +140%
70% +40% +110% +180%

Timing Your Entries

  • London Open (8 AM GMT): High volatility as European institutions enter. Best for breakout trades.
  • London/NY Overlap (1-5 PM GMT): Maximum liquidity. Trends are strongest here.
  • Asian Session: Low volume, ranging markets. Best for range-trading strategies.
  • News Events: Avoid trading 30 mins before high-impact news (NFP, CPI, rate decisions)
  • Monday Open: Watch for gaps and liquidity sweeps of Friday's high/low
  • Friday Close: Avoid new trades — institutions close positions, spreads widen

Pro Tip: The ICT concept of "Killzones" — specific 1-2 hour windows at session opens where the highest probability setups form. London Killzone (8-10 AM) and NY Killzone (1-3 PM) are the best.

Setting Take Profit Levels

  • TP1 (50% position): Set at nearest key S/R level — secure profit early
  • TP2 (remaining): Set at next major S/R level — let winners run
  • Trailing SL: Move SL to lock in profits as price moves in your favour
  • Never move TP closer: If price is approaching TP, let it hit — do not close early
  • Fibonacci targets: 127.2% and 161.8% extensions are common TP zones
  • ATR multiplier: TP = Entry + (2x or 3x ATR) for volatility-based targets
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Key Takeaways

  • Minimum R:R should be 1.5:1 before entering
  • With 1:2 R:R, you only need 34% win rate to be profitable
  • Enter during high liquidity — London and NY sessions
  • Avoid trading 30 minutes before major news
  • Friday afternoons have low liquidity — avoid new entries
  • Use limit orders for better entry prices
  • The best entries are countertrend on short TF within a trend
  • Time in market beats trying to time the market

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