SignavaWhy risk matters more than win rate
Two traders follow the same signals. One risks 1% of their account per trade, the other risks 20%. After a run of five losses — which happens to every strategy — the first is down about 5%. The second is down about two thirds and needs to triple what's left just to get back to where they started.
Same signals. Different outcome. The only difference was position size.
Thinking in R
R is the amount you lose if the stop loss is hit. If you risk $20 per trade, 1R = $20. Signava's spot targets are set in R: TP1 at 1R, TP2 at 2R and TP3 at 2.8R. So with 1R = $20:
| Outcome | In R | In dollars (1R = $20) |
|---|---|---|
| Stop loss hit | −1R | −$20 |
| TP1 hit | +1R | +$20 |
| TP2 hit | +2R | +$40 |
| TP3 hit | +2.8R | +$56 |
Thinking in R makes every trade comparable, whatever the coin's price or how far away the stop is.
Position sizing, worked through
Position size = risk in dollars ÷ stop distance.
- Account: $1,000. Risk per trade: 1% = $10.
- Signal: entry 2.00, stop 1.90 — the stop is 5% away.
- Position: $10 ÷ 5% = $200 of the coin.
A signal with a tighter stop (2%) gets a bigger position ($500); a signal with a wider stop (8%) gets a smaller one ($125). Either way, a stop-out costs the same $10.
Stop losses: non-negotiable
- Place the stop when you open the trade, not after.
- Never move it further away. Moving it closer (for example to break-even after TP1) is fine.
- On futures, keep your liquidation price beyond the stop, or the exchange may close you first.
Surviving losing streaks
Every strategy has losing streaks. With a 40% win rate, a run of six or seven losses in a row will happen eventually. At 1% risk, that's about 7% of the account — survivable. The rules that get people through:
- Keep risk per trade fixed; don't double up to "win it back".
- Don't take every signal at once if the whole market is moving together.
- Judge results over dozens of trades, not the last three.
Risk 1% per trade. Always use the stop. Take part profit at TP1 and move the stop to the entry. Never add to a losing trade.
Frequently asked questions
How much should I risk per trade?
Many traders risk 0.5–2% of their account per trade. At 1%, ten losses in a row cost about 10% — painful but recoverable.
What is a good risk-to-reward ratio?
It depends on the win rate. With targets at 1R, 2R and 2.8R, you don't need to win most trades to come out ahead, as long as losses are cut at 1R.
