Risk To Reward Ratio In Trading

There are two points of self assessment that still stand up: tolerance to risk and the amount of time, because both of them will dictate what type of trading system you end up trading and also the market you will end up trading. At this point you should have started to answer this question in your mind: how will you take profit from the market, how much time can you devote to do it and how much risk are you comfortable with.

You all want to make money and get 200% return but what you have to understand is that on the flip side if you are going to be trading a trading system that return that kind of system, you will have a massive drop down, you need to create a system that creates that type of return.

In your progress, you can end up broke for a few times. When you think at your tolerance to risk, do not only think that you want to make a large amount of money, think about what sort of return you would like to get, and after that think at the level of risk you are willing to take for getting that amount.

Try to be comfortable with it. Different trading products have different trading risk levels. When you talk about leverage products, you talk about the incredible potential for reward, there is a large amount of money that you can make. But, in order to get that potential for reward there is an incredible amount of risk also that you are taking on. But think about the reward, the reward is potential and the risk is certain. The risk is not potential, the risk is there. And the reward is not necessarily there, it is just potential reward.

Submitted by YouTube Trader on Fri, 04/09/2010 - 22:28

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