Return to Risk Ratio

Another way to increase your chances of making a profit is to take advantage of your potential profit as your risk3Trading at times. If your return to risk ratio is3:1， You have a great possibility of making a profit in the end. Take a look at the table below as a reference:

In this example, you can easily see that even if you only50%You can still gain profits from the transaction1A profit of ten thousand yuan. Remember that when you trade at a high return to risk ratio, your chances of making a profit are higher, even if your winning ratio is lower.

But

Setting a higher return to risk ratio requires a cost. On the surface, setting a higher return to risk ratio is a good idea, but consider the situation when applied in practical situations.

Assuming you are a very short-term trader, you just want to take risks3Point of risk. utilize3:1The return to risk ratio, you should obtain9Point. Your chances of making a profit are slim because you have to pay the interest margin.

If the interest margin provided by your broker is2Point, then you have to make a profit11Point, so I have to accept it4:1The return to risk ratio of. But the euro/The US dollar exchange rate will appear in a few seconds3The fluctuation of point, before you can finish saying the word 'uncle', you will stop losing and leave the market.

If you reduce the size of your position, you can expand your stop loss to maintain the ideal return to risk ratio. If you increase your points, you want to take50Point of risk, you need to make a profit153Point. In this way, your return to risk ratio will approach3:1. It's not that bad, is it?

In real situations, the return to risk ratio is not fixed. They must consider the time frame, market environment, and your entry/Adjust the departure position. The return to risk ratio of position trading can be as high as10:1The return to risk ratio of ultra short term trading is as low as0.7:1。