Risk Reward

15 сент. 2022 г.

BTCUSDT



Risk Reward is the ratio of risk of loss of potential profit. Your reward should always be more than losses, look for transactions with RR 1:2, 1:3, 1:4 .... Indeed, in case of failure, the next deal should cover your losses and at a distance this will bring a very good result.
For example: We take $ 1,000 (this is 100% deposit), 100 transactions (50 profit,50 loses) and the minimum RR 1:2, our risk to the transaction 1% loss, and profit 2%.

Let's start with the bad scenario, you made 50 bad deals (the risk of loss for each was 1% or $ 10)
100% deposit -(50 bad transactions*risk 1%) = we get -50% deposit
$ 1000 - (50*10 $) = $ 500
Now we are waiting for a white strip and you have made 50 successful transactions (the risk of loss for each was 1% or $ 10)
Our RR 1:2, which means at the same time our profit from the transaction is $ 20
100% deposit + (50 successful transactions*profit 2%) = we get + 100% deposit
$ 1000 (50*20 $) = 2000 $

Bottom line:
Deposit + 50 profitable transactions - 50 unprofitable transactions = + 50% of the deposit (although we made the same number of both good and bad transactions)
$ 1000 $ 1000 (100%) - $ 500 (50%) = 1500 $
P.S: The example above was given with the constant initial value of the deposit of $ 1000, even after the loss of 50% of the deposit, the risk was taken from the original deposit for a clear simple example. But you must admit that it is almost impossible to make 50 bad transactions in a row.

Risk Management is a risk of loss that you are ready to incur in every deal.
The main rule that you should remember is the risk of no more than 1% of the deposit is not a deal.
Many people think that if the deposit is $ 100, then you can go as it hit, this is not enough, but when there will be a lot of money, then of course I will not do that. But it doesn’t matter how small you have a deposit, because the more it will be, the less you will put the risk of a transaction of 0.2-0.5%.

For example:
You have $ 1000 - this is 100% of the deposit, your risk to the transaction should be no more than 1%, it is $ 10. How to count it correctly? Many simply enter all the money in the deal and close when they have $ 10, this is categorically not correct !!! Before you go into the coin, you need to set a stop-loss (the price of which your transaction will be closed).
So before entering the deal, we must first calculate how much we can buy coins in order to lose only $ 10 when our foot is reached.
Take ETH ($ 1200/1TH)
Deposit: $ 1000
Stop: $ 1100 (when the coin reaches this price, our deal will be closed)
Risk: 1% ($ 10)
Now you need to calculate how many coins we can buy:
Risk 1% / (price ETH is the price of the foot) = the number of coins that we can buy.
10 $ / ($ 1,1100 $) = 0.1 coin.
And only now we understand how much we can go from the deposit with you:
0.1 coin * 1200 price ETH = 120 $ (this is 12% of the deposit).

Bottom line:
1. Pre-Reminance of what to go into the transaction, select where the stop-loss will be (it should not be put at your risk, but where it will not be reached)
2. Now we think how much we can buy coins, so that when reaching the foot we lose only 1% of the deposit.
3. We make our stop-loss
4. We get into the deal
Thanks to these rules, to lose your deposit, you need to make 100 unsuccessful transactions in a row.
Money Management (not to be confused with the market maker) - the correct distribution of personal finances.
It is worth starting with your general finances, do not allocate more for trading than you are willing to lose, make a list divided into 2 columns (income / expense). This way you will be able to understand how much money you have left that you can use beyond basic expenses. Of the remaining amount, it is worth investing no more than 50%, because at any time you can lose all the money.
Let's say you have allocated an amount of $10,000 for investment. There is a huge amount of earnings in the market - spot, futures, farming, sales, etc...
90% of people stop at futures trading, while they believe that their capital is simply not enough for other things.

Then you must understand that:
-20% of your deposit for futures trading will be enough (allows you to open 10 trades).
-20% should be left in USD (any stable you are comfortable with) this is an insurance amount that will definitely come in handy for you.
-50% of the deposit is worth spending on portfolio investment without shoulders and other fuss.
-10% of the deposit is left for participation in sales and auctions, the risk is not more than 5% for 1 project, because you can either get X or lose all the money (there is an opportunity to participate 2 times)
So we distributed your deposit, although initially it seemed to you that it was not enough and were going to trade only futures. At the same time, on futures, you take the risk from the total deposit, and if you suddenly get 20 stops in a row, then you will still have the same 20% in usd (you can also use the stable if you want to open additional positions).
Invest correctly and don't lose your mind, because it doesn't matter if you have $100 or $10,000, if you treat small amounts negligently, then nothing will change with large ones.

Let's talk about the floating variable of your deposit:
You have 10000$ - 100%
-If you lost 3%, take the risk of the original amount, or of the remaining?
-You need to take the risk from the initial amount, set yourself boundaries, for example:
We lost 20%, now we consider the risk of 1% of the balance 8000$ = 80$
Set boundaries for yourself, not to change risk. If you have come to the negative side, you need to take a break and rethink your trading, what are you doing wrong and losing money.
The same system works in the opposite direction, if you have earned 20%, you can switch to risk from the new amount of $12,000, 1%=$120

All your trades must be calculated in %, not in $
In fact, all these numbers should be individual, because many people face a psychological barrier when the amount of risk in $ starts to increase, so you can reduce your risk to 0.5%.
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✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes.

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