What is Correct Risk/Reward Ratio ... - forums.babypips.com

Need some legitimate risk management advice

Brand new to forex, after messing around with stocks and ETFs for a year on robinhood.
In trying to learn about this strange new world, seemingly every article warns me that trading forex is the fastest route to poverty, that I'll lose every dime I have and that I'm better off buying lottery tickets, UNLESS I have a risk management plan.
That's all good and well, but it seems hard to find suggestions on how to actually manage my risk. So far what I have found is either unconvincing, or I just flat don't understand what is being explained. So I've landed here.
Reading the Forex FAQ, in this sub, the advice is to use a very small amount of capital when starting off, and practice live trading from there. If then recommends a formula to use in order to calculate risk, which seems like quite a bit of running calculations for every single trade that I make. Is it really the case that every Forex Trader that manages risk runs a series of calculations for each and every trade in order to figure out pip value and leverage amount, such matter and what have you?
Second problem, before even getting to the risk management section of this Subs FAQ, I'm told to read The Beginner's Guide on baby Pips. Babypips says that when you first start off trading you should not start small because then you will never be able to weather times of drawdown. They recommend something like an initial deposit of $20,000 or 50,000, and saying that if you don't have that much then build up your savings and come back the Forex when you have that to drop into the market. Are you kidding me?
My original plan before reading either of those guides was to deposit $300 and use something like a 10 to 1 or 20 to 1 Leverage.
The part that I'm hung up on which really baffles me and I need some help understanding is everywhere seems to say that I should only risk one or 2% of my account. I don't really understand what that means.
My trading app, OandA allows me to set default trade settings. One of them is trade size, which I can select an option "%Lev NAV" In all of my general Trading I have kept this number at 100, assuming that it is simply using 100% of my account for each trade.
I am also using a system in order to Define very specific entry points with a one-to-one risk reward ratio, setting a stop loss and take profit Target, usually between 9 and 60 Pips in size, depending on the instrument. Thus far, each trade that I have won usually amounts to a 3 to 8% change in the demo account value, which seems comprable to what I was experiencing with stocks and ETFs back on Robinhood. For the last 4 trades I've made, I'm up 15%.
Do I need to adjust this % Lev NAV down to 1% instead of 100? Or do I really need to download a pip value calculator app and make a determination after solving some arithmetic? I just can't seem to figure this out, and different sources use the same words interchangeably yet differently. When risking 1% of my account, does that include leverage, or not, in the trade? And if the most anyone recommends to risk in a trade is 1-2% then why use leverage at all? Won't the returns on 1% be so small as to be negligible? I don't seem to understand how it could possibly be Worth while to spend all that time trading... 1℅ of $300 is three bucks. As I understand it, that would allow me to buy 2 units of the EUUSD... there's no way that could be right, right?
Thanks for your patience and for reading this whole, chapter-length, question of a post.
I look forward to some clarity. I don't know how to switch to live trading, and the demo account does nothing to simulate leverage.
submitted by rm-rf_iniquity to Forex [link] [comments]

Research is very important in Forex trading

In the trading business, you will need to study consistently. Sometimes, you must look for new trading strategies. Whereas sometimes, you may try to improve your errors in the trading plan. Either way, you need to spend a significant amount of time learning strategies and skills. Moreover, you must understand the market conditions too. With fundamental analysis, you must keep track of the price changes. Then when you will get an indication of a price change, technical analysis can be used to find appropriate entry spots for the trades. Aside from the market analysis, traders also do not have enough ideas about money management. So, consistent research on currency trading is necessary to develop your edge. Your Forex trading business may not provide big profit potential in the beginning but with an improved trading edge, you can manage it. And the most exciting thing is, profit potential will be consistent with an efficient trading strategy.
This article is for motivating to the new Singaporean traders to spend time on appropriate research. With patience and concentration, any trader can develop an effective trading plan. So, focus on one is important to execute trades securely. After you have mastered a safe trading approach, increase the profit potential with an improved trading plan.

Improve the market analysis skills

To place any size trade, you need to understand the market condition. An effective process is to do the fundamental analysis first and then technical analysis. The fundamental influences help to identify the possible price trends. But you need to improve your skills to use valid news sources. If the information is not right and you are approaching a trade, it cannot manage a profit potential. So, rookie traders will need to time and research to improve the fundamental skills. Just focus on the news related to the price driving catalysts to predict the volatility.
After the fundamental analysis, you also need to justify the market change with technical analysis skills. It is a calculative approach to justify the fundamental analysis. Moreover, you also get chances to position the trades properly. Using appropriate tools, you need to look for suitable retracement for the trades. The Fibonacci strategy is appropriate for this work. There are more important tools to be used for technical analysis. You need to learn about trend lines, pivot points, oscillators, indicators and chart patterns, etc. so, research and acquire knowledge on Forex market analysis.

Acquire knowledge about trading

There are more things needed for trading aside from the market analysis. If you just think of risk exposure, it will take months to develop a decent money management plan. Sometimes, rookie traders take a longer time than a month due to their negligence on risk exposure. To secure your trades from potential losses, it is important to manage the investment. You cannot trade with too big lots. According to the expert traders, a 2% risk per trade and a 1:10 leverage is enough to execute trades in Forex.
After the money management, you need to focus on the profit targets. It must be set according to your trading method. If you choose 5R of profit while trading with scalping or day trading, majority of the trades will return potential losses. Big profit targets are for long term methods like the swing and the position trading process. If you do not research, our mind would not set the right profit target. So, you must spend a significant amount of time learning about currency trading.

Find appropriate entries and exits

With efficient market analysis, every trader must place the trades properly. It is another fact for a secured trading business aside from the money management. You need to scale the trades properly and find a solid trade setup. Without confirmation from the market analysis, you cannot place any trades. Your trading money will be unsecured if you place a random trade for a random signal. So, look for valid entry and exit points for the trades. Improve your skills with efficient market analysis strategies.
submitted by dwaynebuzzell to tradingfx [link] [comments]

Really need some help...

Hi guys, I've mostly been a lurker or don't visit this forum very regularly..
But I would like to ask you guys a favor.. I am down almost 50% as of today..
I'm not sure why but I just seem to "get it"?
What should I do..? Could anyone guide me personally?
I spent the last 9 months learning from scratch, books, babypips, youtube and other sources.
Is the Forex dream really that difficult? I've tried countless number of strategy then finally worked out one after countless hours of backtesting and at that time I was down 40% then the past month +8% of my initial capital, this week it will be down more than 50% if this current trade does not work out..
I also take very little risk.. like 1%-2%. If someone is free to talk privately it'd be really nice :/
Maybe it's just emotions.
Should I deposit more? How the hell can I regain the initial capital?
The money I lost is 100% can be afforded to lose. But it sucks and feels so damn terrible when I spend so damn much time and am still not able to do it.
How did you guys do it? How much did you start with?
Could you share your story?
How am I supposed to become rich, how much capital and risk per trade with your stats(WL ratio & Risk vs Reward ratio) do you recommend?
submitted by dontknowheretogo to Forex [link] [comments]

BEST Risk to Reward Ratio for Day Trading Stocks and Forex ... How To Use A 3:1 Risk To Reward Ratio (Forex Trading ... 7 Loose small win big, Risk to Reward Ratio The TRUTH about RISK REWARD Ratios - Forex Trading MetaTrader Forex Risk Reward Ratio Indcator ver. 4.00 ... The best Reward/Risk Ratio for your trading Risk to Reward Ratio Myths June 8,2019

Forex Risk to Reward Ratio. Your risk to reward ratio (or reward to risk ratio) is a measure of how much reward you have to potentially gain for how much you risk. A 1:1 risk-reward ratio means you are risking a single dollar ($1) to possibly make a single dollar ($1). A 1:3 risk-reward ratio refers to a trade where you are risking $1 to ... The conventional rule seems to be that the risk/reward ratio for most trades is minimum 1 point reward for every 1 point loss, preferably 2 to 1 or higher. If I were to do frequent daily scalping, looking for a minimum 5-pip profit target per trade, should my ratio then be 5 pips profit target for every 2.5 pips stop loss? Wouldn’t that subject me to frequent whipsaw losses in a volatile ... One good way to improve your risk: reward ratio in the above example is to let go of your entry signal at 1200, and wait for the price to retrace up to around 1215 and give u an entry signal there. Or put a sell limit entry at 1215. If the entry at 1215 is triggered, your stop loss is at 1230, and if the price falls to 1170, you get 3 times reward. If there is no support at 1170, and you are ... Remember that reward-to-risk ratio is simply the comparison of your potential risk (distance from your entry to your stop loss) and your potential reward (distance from your entry to your profit target).. In the example above, Alex first used a 2:1 risk ratio before he bumped it up to a 3:1 R:R ratio. If the latter trade had worked out, Alex would’ve bagged pips three times the size of what ... Forex risk management — position sizing calculators. To make your life easier, you can use one of these calculators below: MyFxBook – Position sizing calculator for forex traders. Daniels Trading – Position sizing calculator for futures traders. Investment U – Position sizing calculator for stock and options traders. The secret to finding low risk and high reward trades. Here’s a ... On the very surface, the concept of putting a high reward-to-risk ratio sounds good, but think about how it applies in actual trade scenarios. Let’s say you are a scalper and you only wish to risk 3 pips. Using a 3:1 reward to risk ratio, this means you need to get 9 pips. Right off the bat, the odds are against you because you have to pay ... Targeting a 1:2 risk to reward ratio puts the odds in your favor and reduces the number of times you need to be right in order to attain profitability. Frequently Asked Questions (FAQS) What are ... Risk Reward Indicator Beginner Questions Babypips Com Forex Ctrader Support Resistance Zone Alerts Indicator Algorithmic Calculate Risk Reward Ratio Like A Professional Trader Forex Forex Trading Loss! es Tax Deductible Volatility Indicator Strategy The Complete Guide To Risk Reward Ratio The Power Of Stop Loss And Risk Reward In Trading For Bitstamp Mt4 Indicator Tsr Ranges Mq4 Forex ... To create a 1:2 Risk/Reward ratio we would then need to make at least twice as much in profit on the position placing limit orders near support at .8475. Now that your now more familiar with Risk ...

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BEST Risk to Reward Ratio for Day Trading Stocks and Forex ...

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