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Risk managementI saw a lot of traders they bet for a bull run, without checking his/her risk/reward ratio. Many unexperienced traders are beting for new ATH at a stock, which shows sometimes a really small risk/reward ratio like 3:1. So they risking 3 times of your investment as they could probably win. That´s why I wanted to write this small explanation about risk/reward ratio. What is it ? Well, you take each trade the risk to loss money, that´s why it is mandatory to handle each trade with a good risk/reward distribution. Your distribution should be minimum a 1:2 ratio. Successful day traders are generally aware of both the potential risk and potential reward before entering a trade. The goal of a day trader is to place trades where the potential reward outweighs the potential risk. These trades would be considered to have a good risk/reward ratio. A risk/reward ratio is simply the amount of money you plan to risk compared to the amount of money you plan believe you can gain. For example, if you think a potential trade may result in either a $400 profit or $100 loss, the trade would have a risk/reward ratio of 1:4, making it a favorable setup. Contrarily, if you risk $100 to make $100, the trade has a risk/reward ratio of 1:1, giving you the same type of unfavorable odds that you can find in a casino. With regards to the long-term profitability formula above, finding trades with high risk/reward ratios (1:2 or higher), will help you maintain higher average profits and lower average losses, making your trading strategy more sustainable. Another important topic is "Cutting losses", related to our risk/reward ratio A stop-loss is a pre-planned exit order for a losing trade. These can be executed manually or automatically on your broker platform. The purpose is to cut losses before they grow too large. Stopping out of a losing trade can be one of the hardest things for day traders to do consistently. However, failing to take stops can result in margin calls, unnecessarily large losses, and ultimately account blowouts.
by TradeandGrow
USOIL 6-1 Retrace ShortWith summer quickly approaching the initiative in the oil market has changed with more aggressive bids similar to what was seen in December of last year. With inflationary conditions in the market becoming evident and supply chain issues causing major ruptures across many markets I still have very a bullish outlook on Oil. That being said, I also expect for a retrace before a continuation higher next month for Oil. This end of month unwind is not uncommon as contracts are rolled, settled and options approach expiration. My ideal target for this trade would be 64.70 where auctioning really picked up in the past 10 days for oil which offers a 6-1. I placed my stops above highs to prevent any impulse move from causing unwanted drawdowns. Feel free to share your opinions and refer to my other post for longer term projections.
TVC:USOILShort
by crawfordpaul
EURUSD LONG Another perfect entry on EURUSD in the NY session for 17th of may. DXY is still weak and continues its descent this Monday starting in the London open with the EURUSD continuing its upwards trend. In the NY session after a healthy correction to the 78.60% fib level (1.21350 psychological level), the EURUSD should continue its way up to 1.21700 level and to eventually surpass it. Seeing all this, I took a long entry from the 1.21350 level. Let's see how this trade pans out. What is your idea regarding this trade? Please comment in the comment section below. THANK YOU FOR READING THIS. THIS IS ONLY A TRADE IDEA. THIS IS NOT FINANCIAL ADVICE. DO YOUR OWN RESEARCH. ALWAYS USE GOOD RISK MANAGEMENT AND STOP LOSS. PLEASE LIKE AND FOLLOW MY CHANNEL IF YOU FIND THIS IDEA USEFUL AND TO DISCOVER MORE PROFITABLE TRADING IDEAS.
Long
by MissC_FX
USDCAD reversal of trend (LONG)Here we can see a double bottom pattern with wick rejections which is showing that there could be a reversal in trend. The USD is seeming to have dropped since BIden has come into power we have seen a drop in the dollar but i have a strong feeling that we will see a strong upside push. The double bottom occurred on both the hour 4 and hour 1 charts. Start of the week we should see the decider if it will push up but will be a nice couple of days hold unless very large candles come at the start of the week. Small stop loss, make sure to use the correct risk management if entering this trade and possibly waiting for more upside movement.
Long
by adammilner
1