EDIT: I've changed the question to be clearer, ignore the poll as it is no longer valid.
I will start with a question. You have setup that has proven to be profitable over a large series of trades where you risk 1 to achieve 4. The setup is highlighted in trade 1. Now, knowing that trade 1 is profitable over a series of trades would you enter at the point highlighted in trade 2 (4 risk to 1 reward) if you missed the chance to take the lower risk entry at trade 1? Note: Trade 2 is a just later stage of the trade 1.
You cannot manage either trade, no movement of sl or tp and no early exit.
Another thing important to consider. Trade 1 may have hit sl a number of times before reaching stage of trade 2. We must not assume that either trade 1 or trade 2 will be a winner. But we do know trade 1 is profitable over a series of trades.
This thread has nothing to do with technical analysis, it is a thread about whether one R:R can be more profitable than another.
Ok so the point I am trying to make is if you say you would only enter trade 1, you must consider that when price climbs towards your target and is 10 pips away (at the trade 2 entry level), by holding on for those last 10 pips whilst having your stop loss now 40 pips away you are effectively taking trade 2 whether you like it or not (lol).
Neither R:R strategy is better than the other. If you have a profitable strategy where you enter with an sl of 10 and a tp of 40, and one day you decide to start taking late entries with a tp of 10 and a stop loss of 40, your results would be exactly the same on both R:R strategies over a big enough sample size.
Another thing I am trying to point out is that you have no control over the R:R of a trade once you are in it (unless you use a dynamic stop loss). The R:R is dynamic and the more you get toward your tp or towards your stop loss, the more your R:R is being skewed either way.
The other thing is that this all implies that entry is not really important, it's the exit that counts.
I will start with a question. You have setup that has proven to be profitable over a large series of trades where you risk 1 to achieve 4. The setup is highlighted in trade 1. Now, knowing that trade 1 is profitable over a series of trades would you enter at the point highlighted in trade 2 (4 risk to 1 reward) if you missed the chance to take the lower risk entry at trade 1? Note: Trade 2 is a just later stage of the trade 1.
You cannot manage either trade, no movement of sl or tp and no early exit.
Another thing important to consider. Trade 1 may have hit sl a number of times before reaching stage of trade 2. We must not assume that either trade 1 or trade 2 will be a winner. But we do know trade 1 is profitable over a series of trades.
This thread has nothing to do with technical analysis, it is a thread about whether one R:R can be more profitable than another.
Ok so the point I am trying to make is if you say you would only enter trade 1, you must consider that when price climbs towards your target and is 10 pips away (at the trade 2 entry level), by holding on for those last 10 pips whilst having your stop loss now 40 pips away you are effectively taking trade 2 whether you like it or not (lol).
Neither R:R strategy is better than the other. If you have a profitable strategy where you enter with an sl of 10 and a tp of 40, and one day you decide to start taking late entries with a tp of 10 and a stop loss of 40, your results would be exactly the same on both R:R strategies over a big enough sample size.
Another thing I am trying to point out is that you have no control over the R:R of a trade once you are in it (unless you use a dynamic stop loss). The R:R is dynamic and the more you get toward your tp or towards your stop loss, the more your R:R is being skewed either way.
The other thing is that this all implies that entry is not really important, it's the exit that counts.