The reward to risk ratio and why its important to us as traders. By Brijesh Patel
Happy Monday Everyone, New Blog post by my boy Brijesh Patel, on twtr @brijesh0789 -------------------------------- The reward to risk ratio and why its important to us as traders. In this article we'll go over what a set risk is and the benefits of having a set risk and using the ratio between it and the potential reward to determine if a trade is worth entering. So the first thing you need to do is determine how much tolerance you have for risk. There are many factors that go into figuring this out but an easy starting point is 1% of your account. It keeps your losses small and allows you to take several losses before they really affect your account. Let’s say you have a $20k account and your risk tolerance is 1%, you would risk about $200 dollars for every single trade you enter. This means that you would need to lose 100 trades in a row to blow your whole account, obviously you should reconsider your strategy before it ever gets anywhere near that bad. The next
