Is it really true what a lot of traders say: that in order for you to make money in the stock market it suffices to use risk management?
For the following reasons, I think it is not true:
Suppose you have a 1:2 risk reward ratio meaning that for every 1 dollar you are risking to lose you may win 2.
Suppose the stock price is 10 and you either lose 2 or win 4 in accordance with the aforementioned risk reward ratio.
The fundamental issue here is that you have more chance of losing 2 than winning 4. In the long run you will have no profit.
You can better understand this with the following reasoning:
There is 50% chance that the price will rise to 14 and 50% chance that the price will fall to 6, this anyone would agree. If it were possible to see all the possible price paths that would lead the price from 10 to 14 you would see a lot situations where the price would firstly fall back to 7 and then rise to 14. When you put an assymetric risk reward ratio like 1:2 you're cutting off those price moves which would lead to 14 so your chance is really smaller of getting to 14.
Thus, it does not seem to me that you can simply can't take money out of the market in the long run using risk reward management.
You can repeat the risk management procedure some times and it seems to work, but in the long run you will give all the money back. That is what statistics tells us.
Is my analysis correct, or have I missed something?