Trading is a skillset that takes time to master. If you’re new to trading, this 2 tips will be of great help to you.
The first tip is to have a realistic expectation
If you’re to focus on just making as little as 10% to 20% profit/return on your capital, it’s much simpler than you think.
But if you’re to focus on making over 100% of your capital, it’s more difficult than you think. You need more research and competence.
Besides, those who make more money in a bull run endup loosing all if it in a bear run.
There confidence get out of the way and put them into big trouble. The more they loose, the more bigger there bet size because they want to recover there loss. But eventually, everything is gone.
The second tip is to look at your trading interms of Risk and Return (RnR) and not interms of money.
Funny enough, I’m still trying to learn and master this tip as well.
If you want to place a trade with a Risk amount (R), you must be able to make a Reward amount (R) as well.
So looking at it interms of ratios:
A risk to reward (RnR) ratio of 1:1 is good if you have a strategy with high wining rate(more wins). For instance 70% win rate .
A RnR ratio of 1:2 is good if you have an average wining rate strategy (moderate or equal wins to loss) eg. 50% win rate .
A RnR ratio of 1:3 is better if you have a low wining rate strategy (less win to loss). Like 40% win rate.
To further elaborate, if your RnR is 1:2, then when you risk $10, you looking at a reward of $20.
So that way if you win 50% of all your trade, you still remain profitable.
Hope you found this two tips useful. Feel free to ask questions in the comments below👇.
I would definitely love to hear from you.