A Thread.
Risk Reward Ratio: RRR
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Risk Reward Ratio: RRR
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RR reflects how much risk a trader is taking on a trade to reach a certain reward.
A trader with right mindset will never operate a trade which get low returns for high loss,
which mean Take Profit Percentage should be at-least 2 times grater than SL Percentage.
which mean Take Profit Percentage should be at-least 2 times grater than SL Percentage.
• Example of 1:3R Trade:
Portfolio size: 1000 USDT
Risk per trade 2% = 20$
Risk/reward = 1:3R (per trade)
Expected profit if take profit hit: 60$
Expected loss if stop loss hit: 20$
Case: If we take 30 Trade, W 15 and L 15. (50% accuracy)
Total Profit = 900$
Total Loss = 300$
Portfolio size: 1000 USDT
Risk per trade 2% = 20$
Risk/reward = 1:3R (per trade)
Expected profit if take profit hit: 60$
Expected loss if stop loss hit: 20$
Case: If we take 30 Trade, W 15 and L 15. (50% accuracy)
Total Profit = 900$
Total Loss = 300$
Total Profit-Total Loss: 900$-300$=600$ (profit)
Key Point: Still in profit of 600$ even if we take loss in equal trades.
Reason being: Only risking 1x amount for a profit of 3x.
Key Point: Still in profit of 600$ even if we take loss in equal trades.
Reason being: Only risking 1x amount for a profit of 3x.
• Example of 1:2R Trade:
Portfolio size: 1000 USDT
Risk per trade 2% = 20$
Risk/Reward = 1:2R (per trade)
Expected profit if take profit hits: 40$
Expected loss if stop loss hits: 20$
Case: If we take 30 Trade, W 15 and L 15. (50% accuracy)
Total Profit = 600$
Total Loss = 300$
Portfolio size: 1000 USDT
Risk per trade 2% = 20$
Risk/Reward = 1:2R (per trade)
Expected profit if take profit hits: 40$
Expected loss if stop loss hits: 20$
Case: If we take 30 Trade, W 15 and L 15. (50% accuracy)
Total Profit = 600$
Total Loss = 300$
Total Profit-Total Loss: 600$-300$=300$ (profit)
Key Point: Still in profit of 300$ even if we took loss in equal trades.
Reason being: Only risking 1x amount for a profit of 2x.
Key Point: Still in profit of 300$ even if we took loss in equal trades.
Reason being: Only risking 1x amount for a profit of 2x.
This is the power of proper RISK MANAGEMENT.
For beginners, risk only 2-3% of your portfolio per trade no matter if your portfolio is 100$ or less. with consistency and patience you can still pull-up visible profits in trades!
For beginners, risk only 2-3% of your portfolio per trade no matter if your portfolio is 100$ or less. with consistency and patience you can still pull-up visible profits in trades!
Bad RR trade example: (3:1R)
Where you risk more than reward.
If you risk 10-12% of your Portfolio and lose a trade, Now to BE on next trade you need to risk same % again, this will put you in high risk of big losses.
Trade Safe, Build a risk management before taking any trade.
Where you risk more than reward.
If you risk 10-12% of your Portfolio and lose a trade, Now to BE on next trade you need to risk same % again, this will put you in high risk of big losses.
Trade Safe, Build a risk management before taking any trade.
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