Hello, my friend, and welcome to this post on the Best Risk Reward Ratio for Day Trading.
In today’s post, I’m going to show you how I use multiple time frames to get a much better risk-to-reward ratio. It’s a simple technique where I keep my risk small on the short-term chart while letting the long-term chart guide my profits. This approach can completely change the way you manage trades and help you stay in winners longer.
I hope you enjoy it!
Was this post/video on Day Trading Trend Following Strategies helpful to you? Leave a message in the COMMENTS section at the bottom of this page.
PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.
Best Risk Reward Ratio for Day Trading – Video
Using Multiple Time Frames for a Better Risk-Reward Ratio
Hey friends, Barry Burns here with Top Dog Trading. Today, I want to walk you through a simple but powerful concept: how to achieve a great risk-to-reward ratio by using multiple time frames.
Now, I personally like to use three time frames: the 5-minute chart, the 15-minute chart, and the 45-minute chart. You can use any three you prefer—this isn’t about which exact time frames to choose. For clarity, I’ll just refer to them as short-term, medium-term, and long-term charts.
The Core Idea
Here’s the main principle:
- Take risk on the short-term chart.
- Take reward on the long-term chart.
That’s the key to getting a strong risk-reward setup. Short-term bars are naturally smaller in range because they only capture a few minutes of price action. That means you can set very tight stops. On the other hand, long-term bars cover more time, and that’s where you can capture bigger moves and larger profits.
An Example in Action
Let’s say we spot a setup on the short-term chart—maybe using MACD, candlestick patterns, or whatever indicator you prefer. For example, I often look for a higher low, a retest, and then MACD crossing back above zero. If I enter just a pip above the short-term bar and place my stop a pip below, my risk is minimal.
But instead of taking profits too early, I let the long-term chart dictate the reward. For me, I often use the 15-period EMA as a “line in the sand” for whether a market is strongly trending or not. That allows me to stay in a trade much longer and ride out the move, rather than bailing out too soon on the short-term chart.
Why This Works
If you only watch the short-term chart, you might feel pressured to exit quickly, especially when you see retracements. But when you zoom out to the longer-term chart, those retracements look much smaller, and you can confidently stay in the trade longer.
This way, your risk stays small (short-term entry) while your potential reward grows much larger (long-term hold). That’s how you get a big difference in risk-reward ratio.
Managing Profits and Positions
Now, as the trade moves in my favor, I always lock in profits along the way. I don’t scale into trades by adding positions—instead, I scale out. The reason is simple: markets only trend about 20% of the time. So, adding to a position during a trend sounds great in theory, but in reality, it works against you most of the time.
My rule is this: I want to get in early in a new trend. As trends continue, the probability of them reversing increases. That’s why I’d rather take profits than add more risk late in the move.
Bonus: The Rubber Band Trade
By the way, I use a custom timing indicator on my short-term charts for every single trade I take—whether it’s a trend trade, a reversal, or a pattern like a head and shoulders. I don’t run the live webinar anymore, but I do have a free recorded training where I explain how I set it up. You can grab that at indicatorwebinar.com.
And while you’re there, you’ll also get access to one of my favorite strategies: the Rubber Band Trade. This one is based on the principle of mean reversion—the exact opposite of a trend trade—and since markets revert to the mean about 80% of the time, it’s an incredibly valuable strategy to add to your toolkit.
Wrapping Up
So that’s the concept: manage risk on the short-term chart, capture reward on the long-term chart, and use smart money management to lock in gains along the way.
Hope this helped! If you found it useful, leave a comment below, subscribe to the channel, and until next time—happy trading!
Free Offer!
I am offering one of my favorite trade strategies called the Rubber Band Trade. Absolutely free. And I want you to go and make some money. Try before you buy, or well, actually try and never buy because there’s no charge for this trade at all. And I’ll give you the setups, the exits, all the rules for it. It’s an objective rule-based method based on price pattern action that I don’t think anyone else teaches.
I’ve never seen anything else teach this particular price structure. So go get that by clicking on the green icon in the top right-hand corner of the video there, or by clicking on the green button below, and that’ll take you to a page where you can opt-in, get the video for the rubber band trade strategy, along with some other great free tutorials, one of my little mini-courses, absolutely free, courtesy of Barry Burns here at Top Dog Trading.
GET MY FREE MARKET ENTRY TIMING INDICATOR
BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at support@topdogtrading.com, and I’ll show you how to get access to that indicator.
What did you think of this Best Risk Reward Ratio for Day Trading video? Enter your answer in the COMMENTS section at the bottom of this page.
PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.
FREE GIFT!
I’m giving away my favorite trading strategy that works in trading the markets. Just click on the button below, and I’ll personally send you an email with the first video.
Those interested in this video of Best Risk Reward Ratio for Day Trading also showed an interest in this video:
Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
https://www.youtube.com/user/TopDogTrading?sub_confirmation=1