Risk to Reward

Another way you can increase your chances of profitability is to trade when you have the potential to make 3 times more than you are risking. If you give yourself a 3:1 reward/risk ratio, you have a significantly greater chance of ending up profitable in the long run. Take a look at this chart as an example:

Risk to Reward

In this example, you can see that even if you only won 50% of your trades, you would still make a profit of $10,000. Just remember that whenever you trade with a good risk to reward ratio, your chances of being profitable are much greater even if you have a lower win percentage.

Forex Training Class Lessons in 13th Grade: Money Management

  1. Money Management
  2. Drawdown and Maximum Drawdown?
  3. Don't Lose Your Shirt
  4. Risk to Reward
  5. Summary of Money Management

Learn Forex in the School of Pipsology

"You must pay the price if you wish to secure the blessings."
Andrew Jackson
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