To turn your strategy from a simple coin toss you need to find an edge – something that just makes you right more often than you are wrong. It is not easy but test test test, analyse analyse analyse and you will hit upon some ideas. You don’t need a hit rate far above 50% and I am not saying that 1:1 is the right ratio. You can have a winning strategy that wins only 33% of the time – why not as long as the wins are more than the losses and cover the spread.
I am just trying to point out that reward:risk ratio will not a fix for a broken strategy. Adding risk just because you were right last time might turn out to be your edge but you will need to test that theory yourself. Personally I think that the markets do not know or care that you were right last time.
As GraHal tried to point out money management is not the answer to all your problems and what you are doing is trying to use money you have already won to increase your gains which is actually just money management. Money management is just something that you add on after you have come up with that winning idea.
Every trader is different with their stop losses. As I said elsewhere to you I like a very very loose stop to give a trade time to work or even no stop at all and just let an indicator decide my exit point.
My strategy is to find what I believe to be a good entry point and then close the trade with profit. How much depends on the markets not a fixed ratio. The markets do not know or care about fixed ratios – they move up and down at varying rates that follow no set rules!
