@rvm
I'm glad you found value in the post.
I don't doubt the profitability of RR based strategies although i suspect most don't really understand why they work.
To speculate; a random chart (ignoring costs and trading mechanics) will likely return 100% (or zero profitability) for reasons mentioned in my prior post.
The fact is markets aren't random and present momentum biases. Basically when price moves in a direction the sheep jump in and the probability of the next move changes from 50:50 to a skew in the direction of the last step.
From an rr based strategy prespective, this presents a probabilistic opportunity to profit off random trades.
The reason being if you were a clueless trader and placed 1:3 rr trades in a random market your wins would be 3x the losses in $ terms and would occur 75% of the time.
With momentum on the clueless traders side, under the 1:3 rr strategy the wins would be 3x the losses in dollar terms however would occur more often than 25% of the time (closer to 50% due to momentum bias).
Basically under brownian theory a subsequent move will always be 50% probability pos or neg. If you throw momentum in the probability is skewed to the next move being in the same direction as the prior.
Had a drink or two so hope this makes sense
