Risk/Reward ratio for successful trading 📊
Many people mistakenly believe that a trader's income depends only on good trading strategy. However, profitable trading is influenced by the ratio of profit and risk.
How to find the right balance between risk per trade and a desired reward?
🔹 In order to understand what is the ratio of risk to reward in a particular trade, a trader needs to determine both the potential reward and the potential risk.
🔹 The Risk/Reward ratio measures the difference between the trade entry point before the stop loss and a sell or take order profit.
🔹 Target Profit is used to chart an exit point in advance in case a trade moves in a favourable direction.
🔹 The potential profit on a trade is the difference between the target profit and the entry price.
🔹 In many cases, market strategists believe that the ideal risk-reward ratio for their investments is approximately 1:3, or three units of expected return for each unit of additional risk.
The risk must be justified, there is no point in getting involved in deals where you can lose $ 100, but the potential earnings do not even reach $ 50.
⠀
Join the successful traders on Cryptology! 💰
#Cryptology_trading
Many people mistakenly believe that a trader's income depends only on good trading strategy. However, profitable trading is influenced by the ratio of profit and risk.
How to find the right balance between risk per trade and a desired reward?
🔹 In order to understand what is the ratio of risk to reward in a particular trade, a trader needs to determine both the potential reward and the potential risk.
🔹 The Risk/Reward ratio measures the difference between the trade entry point before the stop loss and a sell or take order profit.
🔹 Target Profit is used to chart an exit point in advance in case a trade moves in a favourable direction.
🔹 The potential profit on a trade is the difference between the target profit and the entry price.
🔹 In many cases, market strategists believe that the ideal risk-reward ratio for their investments is approximately 1:3, or three units of expected return for each unit of additional risk.
The risk must be justified, there is no point in getting involved in deals where you can lose $ 100, but the potential earnings do not even reach $ 50.
⠀
Join the successful traders on Cryptology! 💰
#Cryptology_trading