0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The Euro has been struggling to maintain its upside momentum. Is EUR/USD readying to turn lower? EUR/AUD may be aiming to rise, but has EUR/CAD topped? Find out from @ddubrovskyFX here: https://t.co/vlJM3iQIYS https://t.co/8FGl10wDto
  • Third consecutive weekly gain in the #SP500 as of today's close, rising 0.63% #Fed balance sheet gained by 0.18% over the same period after shrinking -0.06% previously Generally speaking, the size of the b/s has remained more or less unchanged for a month https://t.co/0TrEA5RGmA
  • The outlook for gold might look a little tenuous at the moment, but this won’t be the first time a strong bull market has shown signs of a potential top due to short-term price action. Get your $XAUUSD technical analysis from @PaulRobinsonFX here: https://t.co/N8a84hRnHN https://t.co/jCEkFzCxEr
  • Well, I don't know who has had it worse this week: Barca or Kodak
  • GBP/USD is either treading water at resistance and is nearing a breakout or is working on developing a top. Get your $GBPUSD technical analysis from @PaulRobinsonFX here:https://t.co/RnrBCFE3gt https://t.co/bDWWjzT57m
  • Stop watching the Champions League game. The FX markets are still open
  • After a swift recovery from the March 2020 low, EUR/USD price action has been in favor of the bulls. Get your EUR/USD market update here: https://t.co/goRwqwO1iC https://t.co/S3LsxMOP1E
  • Precious Metals Update: #Gold 1945.41(-0.42%), #Aluminum 1763.50 (-1.32%), and #Copper 6256.00 (-2.74%) [delayed]
  • Retail Gold CFD traders at IG increased their bullish exposure these these past few weeks. Long interest has hit a new high and the net position is near its cyclical highs for the past year https://www.dailyfx.com/sentiment?ref-author=Kicklighter&CHID=9&QPID=917719 https://t.co/MvbWuuYUcf
  • Fed's Kashkari says not much more the #Fed can do until COVID is contained - BBG
Arriving at a Risk/Reward Ratio

Arriving at a Risk/Reward Ratio

2011-05-27 20:21:00
Richard Krivo, Trading Instructor
Share:

In our live Trading Room Webinars on the principles of Money Management, we often receive questions on one of its key tenets…a 1:2 Risk Reward Ratio.

Keep in mind that a Risk Reward Ratio is nothing more than where a trader places their stop and limit relative to their entry. For a 1:2 RRR, whatever amount the trader is risking based on their stop placement, double that amount and set that as your limit.

Take a look at the 4 hour chart of the EURCAD below...

Arriving at a Risk/Reward Ratio

Let's say that we entered the trade based on a break above resistance at 1.3925. A prudent stop could be placed at the point on the chart labeled Stop...roughly at 1.3810...115 pips below our entry. So the trader would double the 115 and we have 230. So we would add 230 pips above our entry price and we would have 1.4155. Which is roughly the area where we have our limit labeled on this chart.

For a 1:2 RRR, it all boils down to seeking to gain twice the amount we are risking on a trade.

Next: Risk Reward Ratio Validation (40 of 48)

Previous: Just One of a Thousand Insignificant Little Trades

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.