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3. Advance Questions

What reward-to-risk ratio should I aim for?

Besides defining your risk per trade, you should also pay attention to the reward-to-risk ratio of each trade you take. The reward-to-risk ratio equals the potential profit of your trade relative to its potential loss.For exampleSo, if your take profit is set 100 pips away from your entry price and your stop-loss is 50 pips, then your reward-to-risk ratio would be 2. You can potentially earn twice as much as you can potentially lose. Good traders use reward-to-risk ratios of more than 1, and your Forex trading coach should be able to determine the best ratio for you based on your trading style, strategy, and experience.

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