What is Forex and how does it work?
27 November 2015
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- theforexscalper
theforexscalper
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Learn everything about Orderflow trading?
theforexscalper
Email us now :
info@theforexscalpers.com
risk reward ratio forex
Traders have no business trading if risk/reward analysis is not at the top of their concerns.
If a trader has no idea of the potential profit return on any given trade. Relative to the initial risk of taking the trade at all, his long-term profitability is in question.
Of course, for every trader, the best case scenario would be to minimize the first and maximize the second.
But how do you get a handle on the potential reward in any investment and the risk you might be taking on?
Technical analysis – what’s popularly called charting – can help traders evaluate both risk and reward.
The technical indicators used to read the charts will give you the simplest kind of picture you can get of a currency’s performance.
Simply by placing your support and resistance. And by looking at the past performance of a currency. You can get a record of its closing price over time.
Once all of the elements are in place for an analysis, you can calculate your pips difference and verify.
Depending on the trend of the market, if you will make more profit or loss and if it is after all worth the position.
For example, if the market is in a bullish situation, you need to have a higher pips difference. Between your buy-stop order and your resistance price.
Than between your support price and your buy-stop order so that your reward will be maximize and your risk will be minimize.
In each case, upside (bullish) or downside (bearish). The tools of technical analysis will tell you important things about risk and reward. Don’t trade without them.
Risk and Reward Forex
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Welcome to my author blog. With over 12 years of experience in the financial markets, Trading is more than a profession for me; it's a passion that has fueled my curiosity and determination. Over the years, I've explored various trading strategies, dabbled in different asset classes, and navigated through the ever-evolving landscape of technology and innovation. Through it all, I've witnessed firsthand the transformation of the financial industry. My mission is to share the wealth of knowledge I've gained over the years with you, my fellow traders and aspiring investors. Whether you're a seasoned pro looking for fresh perspectives or a newcomer eager to understand the basics, you'll find something valuable here.
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