September 6 (Wed): 【Harmonic】 Nikkei 225 vs Dollar/Yen (Course: Questions about risk-reward)
Good morning ☀
Today we start with an introduction to questions.
“They say risk small, reward large, but if the near side is more often the cut loss than the take profit, wouldn't it just become mostly a cut loss?”
First, let's organize the terms.
“Risk small, reward large”
means to trade with small losses and large profits.
Now, in terms of risk-reward,
What is risk-reward…
It refers to the size of the reward (profit) relative to the risk (loss) “1.”
For a quick refresher,
how to write risk-reward.
‘Reward:Risk’
We express it as.
Even those explaining it often make mistakesand it’s the reverse?
People who are all bragging about their explanations…
Honestly, it’s embarrassing (*ノωノ)
If you want to say a trade is profit:2 and risk:1,
risk-reward = 2:1
.
Back in elementary school, in math,the relationship between ratio and fractionsyou learned, right?
a : b is a/bright?
2:1 is 2/1 (=2)right?
Risk-Reward = 2:1
In other words,
risk-reward = ‘2’
is.
This area is
risk-reward
https://www.gogojungle.co.jp/finance/navi/articles/43963
Risk-Reward ~ How to set Take Profit points (T/P)
https://www.gogojungle.co.jp/finance/navi/articles/44055
Here as well, so if you’re not quite understanding, please check these in conjunction?
Now returning to the question…
“If you entry from an arbitrary point and set reward (T/P, take profit):risk (S/L, stop) to 2:1, that would result in the stop loss being hit far more often.”
Because it’s closer, isn’t it? lol
But trading isn’t like that.
Entry: Enter assets at a point with justification.
S/L: Exit at a point where the justification collapses.
T/P: Withdraw funds based on the justification.
Both Entry and S/L and T/P must be considered as‘market conditions’.
Please also confirm the difference between ‘your own convenience’ and ‘market convenience’?
‘Your own convenience’ and ‘market convenience’
https://www.gogojungle.co.jp/finance/navi/articles/41479
So to answer the question…
I think the stop loss point can be set clearly.
Therefore, if youAttract Entry near the S/Lthen…
● you can expect large profits.
● you can cut small losses and keep the damage small.
This is how it becomes.
They say risk small, reward large, but if the near one is closer to the loss than the take profit, wouldn’t it just be all losses?
If you feel that way,
● Is your entry justification clear?
● Are you setting S/L and T/P based on “market conditions”?
Please think about it again.
Of course…
When I was a beginner, I thought the same, so don’t worry (laugh).
When you truly understand
you will inevitably be able to make better risk-reward trades!
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