What matters more, win rate or risk-reward?
What is the biggest challenge in prop trading?
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When it comes to prop trading, neither win rate nor risk-reward matters on its own—expectancy is what truly rules. Expectancy is calculated as: `(Win Probability x Average Win) - (Loss Probability x Average Loss)`. You can survive with a low win rate if your risk-reward ratio is high, and vice versa. However, prop firm rules like daily loss limits and consistency targets mean that an extreme risk-reward approach with wide stop losses can easily breach your account during a drawdown streak. Managing position sizing to protect that daily limit is your biggest challenge. How do you usually balance your win rate and risk-reward in your strategy? Share your thoughts below!
