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Risk/Reward Ration-Why you should master the Act.

forex_trader_1984295
Member Since Oct 22, 2020
42 posts
Nov 05, 2020 at 06:26
Member Since Oct 22, 2020
42 posts
What is risk and reward ration, and why you should master the Act.
Risk/reward ratio, an estimated measure of th profit potential per amount risked. For example a trader might use a 1:4risk/reward ratio meaning that they are willing to risk $1 to mak $4. Risk and Reward ration potentially give you a hedge to have the best Money Management with huge profits returns with time with very low drawdow.
If you can truly maintain this, you will be making profits with reasonable little risk and it one of the best way to be a profitable trader as it allows you keep making profits at a better ration. First time I started managing funds 20 years ago under a firm, that was where all the emphasis of trading was focus on, once you master the Act, you are a proffesional trader.
Risk/reward ratio, an estimated measure of th profit potential per amount risked. For example a trader might use a 1:4risk/reward ratio meaning that they are willing to risk $1 to mak $4. Risk and Reward ration potentially give you a hedge to have the best Money Management with huge profits returns with time with very low drawdow.
If you can truly maintain this, you will be making profits with reasonable little risk and it one of the best way to be a profitable trader as it allows you keep making profits at a better ration. First time I started managing funds 20 years ago under a firm, that was where all the emphasis of trading was focus on, once you master the Act, you are a proffesional trader.
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May 08, 2021 at 13:19
Member Since Mar 28, 2021
586 posts
LyudmilLukanov posted:
It is essential to survive in the market. After all, it is a risky market.
Managing risk is the most significant yet ignored aspect in trading. I mean most of the traders don't have any risk management coverage. I don't risk more than 1 percent of my funds in one trade. If I start more than 1 trade my highest possible risk percentage is 2%.
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Oct 06, 2021 at 07:06
Member Since Jul 20, 2020
385 posts
blackChelsea posted:
I keep my risk reward ratio to 1:5. There is no harm for getting 1000 when keeping 200 on risk.
Thats the ideal i think between 1:3-1:5 but you have to have the mentality to deal with the losses as the is around a 55%-60% accuracy id say. What is yours like?
Oct 06, 2021 at 12:36
Member Since Dec 13, 2018
6 posts
CraigMcG2020 posted:blackChelsea posted:
I keep my risk reward ratio to 1:5. There is no harm for getting 1000 when keeping 200 on risk.
Thats the ideal i think between 1:3-1:5 but you have to have the mentality to deal with the losses as the is around a 55%-60% accuracy id say. What is yours like?
With a risk reward of 1:3 and a win rate of 55% you would be a excellent trader actually, and is very hard to reach.
You can be very profitable with a RR of 1:1.5 and a win rate of 50%
I think a lot of people have a completly wrong idea of what being profitable is. It is about being consistant in the long run.
A high RR combined with a high win rate is almost impossible. And anybody who is promising these crazy high win rates with crazy high RR is probably bullshitting.
Oct 06, 2021 at 20:24
Member Since Mar 05, 2021
9 posts
The importantce of risk/reward ration cannot be overrated. It is an open secret that it is impossible to be 100% right about the market, that is why you definetely need to hedge your risks by your profits. In this case even if only 50% of your deals are successful, you will still have profits. That is quite a simple concept but it always works.
Member Since Jul 20, 2020
385 posts
Oct 08, 2021 at 07:10
Member Since Jul 20, 2020
385 posts
Wiljanvh posted:CraigMcG2020 posted:blackChelsea posted:
I keep my risk reward ratio to 1:5. There is no harm for getting 1000 when keeping 200 on risk.
Thats the ideal i think between 1:3-1:5 but you have to have the mentality to deal with the losses as the is around a 55%-60% accuracy id say. What is yours like?
With a risk reward of 1:3 and a win rate of 55% you would be a excellent trader actually, and is very hard to reach.
You can be very profitable with a RR of 1:1.5 and a win rate of 50%
I think a lot of people have a completly wrong idea of what being profitable is. It is about being consistant in the long run.
A high RR combined with a high win rate is almost impossible. And anybody who is promising these crazy high win rates with crazy high RR is probably bullshitting.
Yeah completely agree. A sure fire way to know a fake guru is high accuracy and RR. 55% isnt sexy but will make you profitable
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Oct 30, 2021 at 17:48
Member Since Oct 17, 2018
99 posts
No trade is ever a certainty. You need to have a good RR ratio to ensure that you minimise your risk. I only risk 1-2% of my account in any one trade. I like to keep my ratio at 1:3. Without that risk management it is too easy to blow your account or make much higher losses.

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