How can you be wrong about a trade and still make a profit?

My main points of reference are the daily charts, the four hourly, and maybe the hourly chart when my trade has been entered to manage the exit. So scalping really isn't something that I consider as a part of my strategy, or something that even appeals to me at the moment.

However, if you look over my trading statement on the page www.mt4pips.com/lasoi you'll find that there are quite a few trades where the profit or loss is only a few pips. Those trades are not my attempts to scalp the market (that much is clear simply because of the period of time some of the trades are open; if I was trying to scalp the market for 1 or 2 pips, leaving the trade open for several hours would just be maddest!). What they represent are my decision to get out of the trade because it did not react in the way that I thought it would. I find this useful because it can mean that even if I was wrong about what I thought the market was going to do, I can still make a profit, or reduce my loss to less than 1R and preserve capital.

That last point about not losing more than 1R is very important to me. Typically my objective is to make a minimum return of greater than 1.1 times what I am risking (mostly a lot more than 1.1R). What that means is that for every unit of risk (or 1R), I would expect to have the potential to make at least a return 1.1 times that risk. So, if I am risking losing £100 on a trade, at the very least I would need to have a reasonable probability of achieving £110.

The monetary value of what the 1R will be depends on what percentage of capital I have decided to risk. For example, when getting into a trade I know that the maximum I'm willing to lose is roughly between 1% and 5% of my capital (the exact percentage amount depends on my confidence in the probability of the trade set-up being successful; but the risk is never more than 5%). So if I was going into a trade trade where I was willing to risk 3% of my £5,000 capital, it would mean that the 1R would equate to £150 at risk. Going from that, it would mean that I'd be looking for a profit of greater than £165 (i.e. £150 x 1.1). Nevertheless, I would still consider getting out at less than that or at a loss less than 1R if I thought that the dynamics of the trade had changed i.e. the market did not move in the way I thought it would.