The Math of Success
In Smart Money Concepts, we do not care about "Win Rate". A professional trader can lose 6 out of 10 trades and still make a fortune. This is possible through R-Multiple trading.
1. The 1% Golden Rule
Never risk more than 1% of your total account balance on a single trade. If you have a $10,000 account, your maximum loss per trade is $100. This ensures that even a 10-trade losing streak only eats 10% of your capital.
2. Understanding R-Multiples
In Smart Money Concepts, because our refined entries (LTF) allow for very small stop losses, we often see trades with 1:5, 1:10, or 1:20 Risk-to-Reward. If you risk 1R and gain 10R, you have made 10 times your risk. One winning trade can cover 10 losing trades.
RETAIL (1:1)
SMC ACADEMY (1:10)
| Scenario | Win Rate | Avg. RR | Total Result |
|---|---|---|---|
| Retail Strategy | 60% | 1:1 | +2R |
| SMC Academy | 30% | 1:10 | +23R |
3. Managing the Trade
- Break-Even: Move your stop loss to the entry price once the trade achieves a 1:3 RR. This makes it a "risk-free" trade.
- Partial Profits: Close 50% of your position at the first significant structural target. Let the rest run to the "Moon".
- Mean Threshold (50%): If an Order Block is too large, use its midpoint for entry to increase your RR.
Trading Psychology
Institutions LOVE to trade against human emotions. Fear and Greed are the primary sources of Liquidity. By following a mechanical risk plan, you remove emotion from the equation and start thinking like a machine.
