Key Idea: Risk-Reward Ratio
Profitability in trading doesn’t depend only on how many trades you win (accuracy), but also how much
you make when you win versus how much you lose when you're wrong.
🔢 Example:
Accuracy: 5% (i.e., 1 winning trade out of 20)
Risk per trade: ₹100
Reward per winning trade: ₹2,000
Risk-Reward Ratio: 1:20
🧠 Let's Calculate:
19 losing trades × ₹100 = −₹1,900
1 winning trade × ₹2,000 = +₹2,000
Net Profit = ₹2,000 − ₹1,900 = ₹100 ✅
⚠️Why It's Rare:
Finding consistent 1:20 setups is extremely hard.
Price rarely reaches such far targets without hitting stop-loss first.
Requires extreme discipline, emotional control, and rare sniper-like setups.
Most traders can't emotionally handle 19 losses in a row.
🔁 More Realistic Scenario:
Most profitable traders:
Have accuracy between 40–60%
Use 1:1.5 or 1:2 risk-reward
Focus on consistency and capital preservation
✅ Final Answer:
Yes, a 5% accuracy trader can be profitable, but only if:
Their Risk-Reward Ratio is huge (like 1:20 or more)
They are extremely disciplined
They can mentally withstand long losing streaks
But it’s not practical for most traders. Better to focus on:
Improving your edge
Keeping a balanced win-rate and R:R
Maintaining consistency
Would you like me to calculate a breakeven win rate based on your own trading style (RR ratio)?
You said:
what about 1:4 trades
ChatGPT said:
Great question. Let’s break it down for 1:4 Risk-Reward Ratio (RRR).
