Why it is necessary to set Risk: Reward while Trading Forex?
- There is a very popular goal to keep your risk/reward ratio at 1:2 or even 1:3 proportions.
- That means that the trader is willing to risk for example 2$ per share and expect to earn 4$ per share (1:2) or 6$ (1:3).
If the risk/reward ratio is around 1:1, they do not enter a trade because it is not worth that risk.
Let’s concentrate on the Risk part first then
When to set stop losses?
- The best practice is to set stop loss at the same time you are placing your order.
- You should know in advance where you want to set your stop loss. Why?
- Because later you are probably going to hesitate to place SL. You might also place it in the wrong place, because of emotions.
How one can make Good profit by applying Risk: Reward practically?
- An account with 86% Accuracy in Loss while Account with 15% accuracy in profit – trade’s analysis