Why do people often focus on that profit-loss ratio?
The profit-loss ratio is important, but trading is a balance of profit-loss ratio, win rate, and position size.
A win rate of 100% does not guarantee that the next trade will be profitable.
With a constant position size, the profit-loss ratio multiplied by the win rate must be greater than 0.5 to make a profit (ignoring fees and slippage).
If I open a position of 100 units with a profit-loss ratio of 1:1, my win rate must be over 50% to make a profit (in reality, it needs to be higher than 50% when accounting for fees).
If I open a position of 100 units with a profit-loss ratio of 2:1, my win rate only needs to be above 25% to make a profit.
It's surprising that some people still don't understand such a simple concept.
The so-called trading system is about achieving a balance among these three factors, and there are countless ways to achieve this balance, which is why everyone's trading system is different. You should refine your trading system based on your personal character.
