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The Psychological Advantage of 1-to-1 Risk-Reward
I need to share something personal with you that completely transformed how I approach trading — and more importantly, how I feel when I'm not actively in the markets.
Years ago, I managed a currency fund where I'd sit in horrible drawdowns for months, refusing to take losses. I'd dollar-cost average in, scale positions and build trades that left me managing a few million dollars in leveraged currency markets.
Here's the reality of what that looked like: I watched the market 24 hours a day for the entire week, and I couldn't sleep until Friday after close. Why?
Because I'd have positions over-leveraged at 10 standard lots, down $50,000, all based on a pivot point that should have hit weeks ago.
I know what it feels like when your heartbeat pounds out of your chest whether you win or lose. And I can tell you with complete certainty, it doesn't make you trade better.
If anything, it leads to faster, more irrational decisions, the kind where you look back and think…
I don't like it, it doesn't make me trade any better. In fact, it makes me make faster decisions, probably more irrational decisions, and that's not where I want to be.
The turning point came during Brexit. I over-leveraged on a pound-Aussie trade and took a 6% haircut overnight during the flash crash in the pound in 2016. That's when I started to seriously reconsider my entire approach.
Why 1-to-1 Risk-Reward Changed Everything
Fast forward to today, and my trading life looks completely different. Now that it's opening bell to closing bell — and now that it's defined risk — trading is a lot less stressful.
Here's my approach now: If I tighten up that risk where it's 1-to-1, I lose one trade, I win one trade, I'm back to break even. Then I plan on banking more wins so I'm ahead of the game.
Look, I'm still annoyed when I lose. I'm human. But there's a massive difference between being annoyed and being unable to sleep because you're overleveraged in a 24-hour market.
And honestly, all I'm saying is that when people trade sizes that make them super angry or super emotional, or they're doubting the success of a strategy, they're trading too big.
The lesson I learned the hard way is this: Make the numbers, the percentages, the dollar percentages manageable — make it feel inconsequential, make it a game.
You play the game, you try to win the game. That's what this is.
As I stepped back and looked at the stress, I realized I just liked currency trading less, and I wanted to get better at trading options and managing stocks, recognizing that the general market bias is to drift higher.
That shift opened the door to a completely different quality of life and a different quality of trading.
The Real Cost of Emotional Trading
The more you let the market take energy from you, it'll always keep taking it from you. You'll never be satisfied if you're constantly stressed about every position.
Here's my litmus test: When people trade sizes that make them emotionally super angry or super emotional, or they're doubting the success of a strategy, they're trading too big.
That one realization alone can save traders years of unnecessary frustration.
I'll be honest — my Daily Profit Plays annoyed me a lot when I lost, because I don't like to risk more than what my reward is. But I also understand that's the trade-off when you're looking to make consistent money without having to perfectly pick direction every single time.
The shift from leveraged forex to options with defined risk didn't just change my P&L — it changed my entire relationship with trading. I'm calmer, more rational and I actually enjoy the process instead of dreading every market open.
If you're feeling that chest-pounding stress right now, it's worth asking yourself: Is this position size really serving my strategy, or is it just feeding anxiety?
And if you like the sound of 1-to-1 risk-reward trading, I’m unveiling a brand-new strategy at 7 p.m. ET this Sunday. It’s called Engineered Options, and it involves simple spreads that last from Monday one week to Monday the next.
I can’t wait to share it with everyone, so if you’re interested, be sure to save your seat here and join me for the big reveal of smarter, less stressful trading.
Until then, I’ll see you in the markets.
We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. The results shown are from a 237-trade backtest from 1/1/20 - 1/1/26. The result was a 70% win rate, 40% average return (winners and losers), with a 7-day hold time.
Chris Pulver
Chris Pulver Trading
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