Hi there,

Greetings from new member. This is my first thread in this forum and I hope this content of mine is helpful to other fellowship members who's still beginners and keep looking for ways out of their problems in trading.

It's called risk and reward ratio. How does it important for us? Of course it is, because we'll know how much risk we want to take per trade and how much of money we can afford to lose, since we can't expect to get profits all the time from market, yes? Knowing that we're competing ourself to other traders in market, we must be careful before taking any decisions to market because everything will determine our result.

I got few recommendations about risk and reward ratio and which amounts are best for beginners to help them learn trading and able to feel the experience of profit taking and losing accepting in this business. There are the ratios: 1:2, 1:4, and 1:10. Where the first number indicates how much we want to risk our money and the second number indicates how much rewards we're looking for.

Simple math needs to be explained. In first case with 1:2 risk reward ratio and we got $100 deposit, where we can risk our money $10 and then our expected profits should be $20. Our stop loss will be $10 and $20 is our next take profit. And so with any examples you can make on your own as long as it follows the listed risk to reward ratio that I've suggested before. The bigger the reward, the longer we must hold the trade without increasing the risk and keep it fixed.

Linkback: https://www.forex.zone/forex-education/29/understanding-risk-and-reward-ratio-for-beginners/924/