Posts Tagged ‘risk to reward ratio’

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When to Apply Risk and Reward Ratios?

In this video, you will learn when to apply risk to reward ratio in forex trading. Many beginner traders might wonder how they go about finding a good trading setup that yields a good risk to reward ratio. So, what is risk to reward ratio? Consider an example. Assume that the market is range bound and the width of the range is 50 pips. So, you take a long position […]

The Risk to Reward Ratio Explained in One Minute: From Definition and "Formula" to Examples

In this video, you will learn about risk to reward ratio. It is a ratio that tells you how much profit you make for every unit of currency you risk in a particular trade. For example, if your risk to reward ratio is 1:4, then for every $1 you risk, you make $3 as profit. Assume you have invested $100 in your trading account. Now you trade […]

Overview of Risk Versus Reward

In this video, you will learn about the risk versus reward in forex trading. Losses are inevitable in trading. You need to have the mindset to accept losses and cut those losing trades. A few winners with a good risk to reward ratio can still make you profitable. Look at this chart. This is a big hammer candlestick at the end of this downtrend. Your stop-loss is below the bottom of this hammer. […]

Risk/Reward in Forex Trading

One of the most important concepts in trading is risk to reward ratio. We will be talking a lot about in later lessons. Just like in real life, when faced with the decision we use cost-benefit analysis to determine whether the benefits outweigh the costs, we do the same in forex by measuring the risk to reward ratio. Forex is a random process. Just like throwing a coin, you cannot always expect for it […]

A Simple Exercise to Illustrate the Power of Risk Reward Ratio in Forex

There is a simple formula for absolute guaranteed long-term profitability and that is your wins must be bigger than losses. Your system needs to win half of the times. So, you don't need to worry about losing streaks, etc. You just need to win half of the time. This video illustrates a very simple exercise that you can do at home at no cost. All you need is […]

How to Use and Calculate Risk/Reward Ratio for Trading

In this video, we are going to discuss the risk to reward ratio. This is something that every trader needs to include within their money management techniques. You may have heard of traders who generate more winning trades than losing trades, but still lose money. So, their wins tend to be constant and frequent, and usually the same amount in every single trade. But then a single […]

Forex Trading — Setting Targets and Stop-Loss

In this video you will learn about how to set targets and stop-losses. Let us start with risk management. One of the common things all successful traders do is that they cut their losses and let profits run. It is not easy and very difficult to practice. In fact historical data shows that the EUR/USD trades close at profit 61% of time. Average loss was 70% more […]

The Hidden MetaTrader Risk Reward Ratio Calculator — MetaTrader 4 Tutorial

This video shows you how to use the risk to reward ratio calculator in MetaTrader platform. But there isn’t really a built in calculator, but I can show you how to use one of the existing tools to calculate your risk to reward ratio. Basically, what we are doing is hijacking the Fibonacci tool. Let’s choose the Fibonacci tool and plot it on the chart. Right click and now we go to properties and we […]

Risk Reward Ratio

Risk—Reward ratio is used by many Investors to compare the expected returns of an Investment to the amount of risk undertaken to capture these returns. The ratio is calculated mathematically by dividing the amount of profit the trader expects to have made when the position is closed by the amount when the trader stands to lose if price moves in unexpected direction. For example, lets say that a trade purchases 100 shares of a company at 20 Dollars and places a stoploss order […]

Drawdown of 50% Wins 1:1 Reward Risk

Shaun Overton in this video discusses about the outcome of trading strategy with 50% winning percentage of a system with a 1:1 risk to reward ratio. We take into account strictly the Dollar weakness and how it fluctuates over 200 trades. He discusses about winning and lose scenarios with risking 1% and 2% of 100,000 USD and explains the outcome with a graph using Standard deviations for determining the outcome.