Is your trading what it's supposed to be. At least mathematically speaking? It's all about the numbers. What I mean is that when a trade is placed the amount that is risked should be less than or equal to two time the amount thats expected to be gained. That for me would be the bare bones absolute minimum R/R I would use. Much more often than not I use 1:3 R/R and always higher when I can get it. Remeber the higher the R/R the less times you need to be right and still make a profit.
Risk to Reward ratio
- Thread starter flex922
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Any Risk to Reward ratio of 1:2 and above will be a good one. For every 10$ invested a gain of 20$ will give 200% returns.
I like how UWC puts it and its really good, though I go for less reward
Generally speaking it depends on the trader on how much risk he is going to take and for how much gains.
Low risk trading is more stable than High risk.
Please learn that leverage in this type of trading (FOREX Margin trading) has nothing to do with risk. The risk increases when you open too big position for your account which can happen by using leverage from your broker. Actually, the term “leverage” is not used only in this FOREX trading. One quick example is buying shares with money without using any leverage from the broker . After you buy this shares you can make a repo in the bank to get more money and buy more shares. In that case your portfolio becomes highly leveraged and you may not be able to buy back the shares given to the bank for money.
The main thing that any trader needs to look at is the use of the Leverage. When we use a lower leverage then it will be safe for us since the loss will be less.
The thing is that leverage is quite underestimated that it also have a negative side to it, that when you loose , and you are with a higher leverage, your looses are higher since you have less funds to cover the loss up. unfortunatelly, i tend to see more zulutrade signal provider and also followers doing this mystake.
Find a broker or Market Maker that offers 50:1 there is no need for any more leverage than that. The more risk or 'chance' you introduce to your strategy, the more often you will feel the hit.
I only take trades that have the potential to make at least twice what I'm risking ie. a R/R of 2:1. Based on my trading history I could theoretically go down to 1:1.5 and still be profitable over time. However, I wouldn't be comfortable doing that, plus I only take the highest probability trades.
I always work wit ha Risk to Reward ratio of 1:3 or above. For every 1$ risked into the markets you must have the capability to earn 3$ of profits
I always work wit ha Risk to Reward ratio of 1:3 or above. For every 1$ risked into the markets you must have the capability to earn 3$ of profits
That's quite high. Is that because you are not comfortable going lower than 3:1?
I wish you luck with that dominator. I have been burnt in the past for concentrating too much on potential gains in replacment of a watchfull eye on potential loss. That would prevent me being comfortable with such trading. But I admire your courage and I hope it works for you.
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