September 6 (Wed): [Bollinger Bands] Nikkei 225 vs USD/JPY (Course: Questions about risk-reward)

Good morning ☀

Today we start with a question introduction.

“They say small losses and big gains, but if the point of breakeven is closer to a loss than to a profit, wouldn't there be mostly losses?”

First, let's sort out the terms.

“Small losses, big gains” means...

to trade by keeping losses small and profits large.

Then, in terms of risk-reward,

What is risk-reward...

It is the size of the reward (profit) relative to the risk (loss) “1.”

For a refresher,

how to write risk-reward.

‘Reward:Risk’

is the notation.

Even among those explaining it, most people mistake itand it is written the other way around?

People who explain it confidently but are mistaken...

Honestly, it’s embarrassing (*ノωノ)

If you want to say a trade is Profit:2, Risk:1,

then risk-reward = 2:1

.

Back in elementary school, in arithmetic,we learned the relationship between ratios and fractionsright?

a : b is a/bright?

2:1 is 2/1 (= 2)right?

Risk-reward = 2:1

In other words,

risk-reward = ‘2’

is what it means.

This area is

risk-reward

https://www.gogojungle.co.jp/finance/navi/articles/43963

Risk-Reward ~ How to set the Take Profit (TP) point   

https://www.gogojungle.co.jp/finance/navi/articles/44055

Here too, it is explained, so if you’re still not quite understanding, please check it out as well?

Now, returning to the question and answer…

“If you Entry at an arbitrary point and set the reward (TP) : risk (S/L) to 2:1, then it will be far more likely to hit the S/L.”

Because it’s closer, after all.”

Entry: Put assets at a point with a basis.

S/L: Exit at a point where the basis collapses.

T/P: Based on the basis, withdraw funds.

Both Entry and S/L and T/P must all be considered‘market conditions’.

Please also consider the difference between your own convenience and market convenience?

‘Your convenience’ and ‘market convenience’

https://www.gogojungle.co.jp/finance/navi/articles/41479

In other words, to answer the question…

I think you can clearly set your stop-loss point.

Therefore, if youpull Entry up close to the S/L, then…

● You can expect a large profit.

● Small stop-losses are possible, and the damage is small.

This is how it works.

They say small losses, big gains, but if the point of breakeven is closer to the loss than to the profit, wouldn’t there be mostly losses?

If you feel that way,

● Is your Entry basis clear?

● Are your S/L and T/P set by ‘market conditions’?

Please think about it once more, okay?

Of course…

I also used to think the same thing when I was a beginner, so don’t worry (laughs)

When you truly understand it,

you will naturally be able to make trades with favorable risk-reward!

(Note: The following is limited to members.)