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Educational Post:
What is Risk/Reward (R:R) Ratio?
Whether youβre day trading or swing trading, there are a few fundamental concepts about risk that you should understand. These form the basis of your understanding of the market and give you a foundation to guide your trading activities and investment decisions. Otherwise, you wonβt be able to protect and grow your trading account.
The risk/reward ratio (R/R ratio or R) calculates how much risk a trader is taking for potentially how much reward. In other words, it shows what are the potential rewards for each $1 you risk on an investment.
The calculation itself is very simple. You divide your maximum risk by your net target profit. How do you do that? First, you look at where you would want to enter the trade. Then, you decide where you would take profits (if the trade is successful), and where you would put your stop-loss (if itβs a losing trade). This is crucial if you want to manage your risk properly. Good traders set their profit targets and stop-loss before entering a trade.
Now youβve got both your entry and exit targets, which means you can calculate your risk/reward ratio. You do that by dividing your potential risk by your potential reward. The lower the ratio is, the more potential reward youβre getting per βunitβ of risk.
How to calculate the risk/reward ratio?
Letβs say you want to enter a long position on Bitcoin. You do your analysis and determine that your take profit order will be 15% from your entry price. At the same time, you also pose the following question. Where is your trade idea invalidated? Thatβs where you should set your stop-loss order. In this case, you decide that your invalidation point is 5% from your entry point.
So, our profit target is 15% and our potential loss is 5%. How much is our risk/reward ratio? It is 5/15 = 1:3 = 0.33. Simple enough. This means that for each unit of risk, weβre potentially winning three times the reward. In other words, for each dollar of risk weβre taking, weβre liable to gain three. So if we have a position worth $100, we risk losing $5 for a potential $15 profit.
What is Risk/Reward (R:R) Ratio?
Whether youβre day trading or swing trading, there are a few fundamental concepts about risk that you should understand. These form the basis of your understanding of the market and give you a foundation to guide your trading activities and investment decisions. Otherwise, you wonβt be able to protect and grow your trading account.
The risk/reward ratio (R/R ratio or R) calculates how much risk a trader is taking for potentially how much reward. In other words, it shows what are the potential rewards for each $1 you risk on an investment.
The calculation itself is very simple. You divide your maximum risk by your net target profit. How do you do that? First, you look at where you would want to enter the trade. Then, you decide where you would take profits (if the trade is successful), and where you would put your stop-loss (if itβs a losing trade). This is crucial if you want to manage your risk properly. Good traders set their profit targets and stop-loss before entering a trade.
Now youβve got both your entry and exit targets, which means you can calculate your risk/reward ratio. You do that by dividing your potential risk by your potential reward. The lower the ratio is, the more potential reward youβre getting per βunitβ of risk.
How to calculate the risk/reward ratio?
Letβs say you want to enter a long position on Bitcoin. You do your analysis and determine that your take profit order will be 15% from your entry price. At the same time, you also pose the following question. Where is your trade idea invalidated? Thatβs where you should set your stop-loss order. In this case, you decide that your invalidation point is 5% from your entry point.
So, our profit target is 15% and our potential loss is 5%. How much is our risk/reward ratio? It is 5/15 = 1:3 = 0.33. Simple enough. This means that for each unit of risk, weβre potentially winning three times the reward. In other words, for each dollar of risk weβre taking, weβre liable to gain three. So if we have a position worth $100, we risk losing $5 for a potential $15 profit.
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#UNFI/USDT #SHORT (BINANCE FUTURES ) BUY : 7.95$- 7.30$ TAKE PROFIT : TARGET 1 : 7.00$ TARGET 2 : 6.85$ TARGET 3 : 6.70$ TARGET 4 : 6.55$ TARGET 5 : 6.40$ TARGET 6 : 6.25$ STOP LOSS : 8.00$ βπ½Use 2% Fund Only LEV : 10X-20X (CROSS) BUY IN PARTS & HOLDβ¦
#UNFI/USDT #SHORT
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Average Entry 7.40βοΈ
Price hit 6.50ππ€βοΈ
TARGET 1 2 3 4 DONE β
230% PROFIT 20x Lev π° π€
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πΉππππππ πππ πΊ πΉ
#UNFI/USDT #SHORT (BINANCE FUTURES ) BUY : 7.95$- 7.30$ TAKE PROFIT : TARGET 1 : 7.00$ TARGET 2 : 6.85$ TARGET 3 : 6.70$ TARGET 4 : 6.55$ TARGET 5 : 6.40$ TARGET 6 : 6.25$ STOP LOSS : 8.00$ βπ½Use 2% Fund Only LEV : 10X-20X (CROSS) BUY IN PARTS & HOLDβ¦
#UNFI/USDT #SHORT
Average Entry 7.40βοΈ
Price hit 6.25ππ€βοΈ
ALL TARGET DONE β
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Average Entry 7.40βοΈ
Price hit 6.25ππ€βοΈ
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#OGN/USDT #LONG
(BINANCE FUTURES )
BUY : 0.2000$- 0.2170$
TAKE PROFIT :
TARGET 1 : 0.2240$
TARGET 2 : 0.2285$
TARGET 3 : 0.2330$
TARGET 4 : 0.2380$
TARGET 5 : 0.2430$
TARGET 6 : 0.2500$
STOP LOSS : 0.1990$
βπ½Use 2% Fund Only
LEV : 10X-20X (CROSS)
BUY IN PARTS & HOLD β
Copyright Β© @binancewolves
(BINANCE FUTURES )
BUY : 0.2000$- 0.2170$
TAKE PROFIT :
TARGET 1 : 0.2240$
TARGET 2 : 0.2285$
TARGET 3 : 0.2330$
TARGET 4 : 0.2380$
TARGET 5 : 0.2430$
TARGET 6 : 0.2500$
STOP LOSS : 0.1990$
βπ½Use 2% Fund Only
LEV : 10X-20X (CROSS)
BUY IN PARTS & HOLD β
Copyright Β© @binancewolves
β€3π₯1
πΉππππππ πππ πΊ πΉ
#OGN/USDT #LONG (BINANCE FUTURES ) BUY : 0.2000$- 0.2170$ TAKE PROFIT : TARGET 1 : 0.2240$ TARGET 2 : 0.2285$ TARGET 3 : 0.2330$ TARGET 4 : 0.2380$ TARGET 5 : 0.2430$ TARGET 6 : 0.2500$ STOP LOSS : 0.1990$ βπ½Use 2% Fund Only LEV : 10X-20X (CROSS) BUYβ¦
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https://www.instagram.com/reel/Cf6s_PWBdLm/?igshid=YmMyMTA2M2Y=
25k Followers Instagram Business Account for Sale Interested people DM Us @binance_wolf
25k Followers Instagram Business Account for Sale Interested people DM Us @binance_wolf
πΉππππππ πππ πΊ πΉ
#OGN/USDT #LONG (BINANCE FUTURES ) BUY : 0.2000$- 0.2170$ TAKE PROFIT : TARGET 1 : 0.2240$ TARGET 2 : 0.2285$ TARGET 3 : 0.2330$ TARGET 4 : 0.2380$ TARGET 5 : 0.2430$ TARGET 6 : 0.2500$ STOP LOSS : 0.1990$ βπ½Use 2% Fund Only LEV : 10X-20X (CROSS) BUYβ¦
#OGN Closed with Small Stop loss will recover in next trade β
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BREAKING: US INFLATION HITS 9.1%, A NEW 40-YEAR HIGH
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BREAKING: π·πΊ Vladimir Putin has signed a law banning #Bitcoin and #cryptocurrency as a means of payment in Russia.
https://watcher.guru/news/russia-president-putin-signs-law-banning-crypto-payments
https://watcher.guru/news/russia-president-putin-signs-law-banning-crypto-payments
Watcher Guru
Russia: President Putin Signs Law Banning Crypto Payments
President Putin signed a law that bans the use of crypto as a means of payment for goods, products, or services in Russia
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