30% WIN RATIO AND STILL PROFITABLE?-Trading psychology and Risk
Hello traders!
-READ THIS DESCRIPTION FOR MORE INFORMATION!
-This tutorial is for people who are struggling with RISK MANAGEMENT and MONEY MANAGEMENT.
In this tutorial i will show you how to be profitable with 30% ratio.
But first i will explain you what is risk and reward.
-Risk is amount of money or percentage what are you willing to risk(lose).
-Reward is amount of money or percentage that you want to achieve.
When you decide to start trading or you are already trading but still struggling with risk and money management you should follow my advice to improve your trading.
I will give you few things to consider when you are trading forex markets.
I will give you 4 tips to follow to become more profitable:
1.Don't risk more than 3% of your total capital!
-Lets say you have 1000$ account and you want to start trading,you decide to risk 3% of your capital and that is 30$ with risk reward ratio 1:1 and you won 6 trades,you made +30$ of total profit.You have 60% win rate and you made only 3% of total return.WHY?I will explain in next paragraph!
2.Focus on RISK REWARD RATIO!
-With proper RISK REWARD RATIO you can win more % and more money while you have less than 60% win rate,let me explain!
Lets say you have 1000$ on your account and you decide to enter a trade.You are willing to risk 3% of your total capital BUT now your RISK REWARD RATIO is 1:3
What that means? That means that you are risking 3% to make 9% and with even lower win ratio you can be still profitable,you can survive this long term game!
-Lets say you have 60% win ratio like in previous situation but with 1:3 RISK REWARD RATIO.You won 6 trades and lose 4 BUT you lost 4% and you make 18% and at the end that is +12% of total return on your capital.You see same win ratio percentage but with way more better results than with 1:1 RISK REWARD RATIO!
-You lost 40$(4% of total account balance) and you win 180$(18% of total account balance).
-You put stop loss lets say 50 pips and you put take profit at 150 pips for example.
3.Let winners run and cut your losses at proper time!
-Lets say you put your stop loss 100 pips above you sell order and the price went strong bullish and you see that the price will hit your stop loss but you hope that trend will reverse or something like that,...Don't do that! WHY?
In trading you should be aware that your emotions will affect your final results!
-When trading you will feel lot of different emotions such as;fear,joy,hope,greed,impatience and so on.
Let me explain something about that emotions for you!
-FEAR-You face fear in few situations,first situation is when your trade is in profit but you have fear of losing that trade and you close with few pips in profit instead letting it run until profit target,...Second situation where you face fear is when you put too much orders of same pair and all pairs went in negative direction.
-ADVICE FOR YOU:Risk amount that you can cover with win trades,lets say risk 1 to get 3 and if you lose 3 trades you will cover your loses with that one trade and do not open to much same positions!
-JOY;Joy is good in life but in trading can be very very bad!WHY???
Lets say you won 3 trades in the row and now you feel very happy and you think that you are master of trading now,...In next trade you decide to put bigger lot and you lose that trade,What now? In one trade you lost all your profit from your previous win trades or even more!
-ADVICE FOR YOU:Sometimes you will win sometimes you will lose but that is part of the game,it is okay to celebrate your wins but you need to be aware that loses are part of the game too.Also when you win some trades do not increase your lot to much because you think you are now master of forex.
-HOPE;It is good to have hope in life(health,health of your family) but in trading hope can erase you all account balance!HOW?
-Lets say you put trade and you see that trade is going in wrong direction and you know that price will hit your stop loss but you HOPE that trend is going to change somehow but at the end you ended up with loss,and you known that you are going to lose and you did not cut off that trade because of HOPE!
-ADVICE FOR YOU;Cut off your losing trades and let your winners run!
-GREED;Remember this;BEARS WIN,BULLS WIN BUT PIGS ALWAYS GET SLAUGHTERED!-What that means?Pigs are greedy and greed will destroy your confidence and your account balance.
-ADVICE FOR YOU;Let your winners run and don not be greedy when you see little profit and you decide to close the trade,do not over trade,if you have bad day,you have more loses than wins,do not trade more because all you want is profit.You will have new opportunity tomorrow!
-IMPATIENCE:Impatience is big enemy of traders!Always be patient and disciplined about your trading!
4. 30% AND STILL PROFITABLE?-Do not focus on money focus on %
-I will show you simple formula how to calculate your RISK REWARD RATIO and this is how it goes;
-1:3 risk reward ratio with 30% win rate, so you have 7 loses and 3 wins if you take 10 trades.
= -7x1+3x3
= -7+9
= +2%
I will explain you why is like this;
-You lose 7 trades and per every trade you lose 1% so you lost 7 trades and that is 7%
-You won just 3 trades BUT with 1:3 risk reward you get for every win 3% in return so that is 3x3=9%
At the end you ended up with +2% in profit with just 30% win rate!
Lets do another example but with 1:4 RISK REWARD RATIO
-1:4 risk reward ratio with 30% win rate,you lose 7 and you win 3 if you take 10 trades.
= -7x1+3x4
= -7+12
= +5%
-Look at this now 30% win rate and you are still profitable!
-With 1:4 risk reward ratio you can lose 7 trades and win JUST 3 trades and you are still profitable!
-You lose 7(-7x1 ) trades but for every trade that you lose,you lose 1% and for every win trade you win 4% in return so that is 3x4=12
-At the end you ended up with +5% in profit with just 30% win ratio!
5.CONCLUSION
At the end i will tell you what you need to learn from this;
-Don not risk more than 3%
-Focus on RISK REWARD RATIO
-Do not let emotions ruin your trading
-Do not focus on money focus on %(total return at the end of trade)
THANK YOU SO MUCH FOR READING THIS TUTORIAL ABOUT TRADING PSYCHOLOGY!
-If you like this content please support me with like and follow me for more new tutorials and analysis!
-READ THIS DESCRIPTION FOR MORE INFORMATION!
-This tutorial is for people who are struggling with RISK MANAGEMENT and MONEY MANAGEMENT.
In this tutorial i will show you how to be profitable with 30% ratio.
But first i will explain you what is risk and reward.
-Risk is amount of money or percentage what are you willing to risk(lose).
-Reward is amount of money or percentage that you want to achieve.
When you decide to start trading or you are already trading but still struggling with risk and money management you should follow my advice to improve your trading.
I will give you few things to consider when you are trading forex markets.
I will give you 4 tips to follow to become more profitable:
1.Don't risk more than 3% of your total capital!
-Lets say you have 1000$ account and you want to start trading,you decide to risk 3% of your capital and that is 30$ with risk reward ratio 1:1 and you won 6 trades,you made +30$ of total profit.You have 60% win rate and you made only 3% of total return.WHY?I will explain in next paragraph!
2.Focus on RISK REWARD RATIO!
-With proper RISK REWARD RATIO you can win more % and more money while you have less than 60% win rate,let me explain!
Lets say you have 1000$ on your account and you decide to enter a trade.You are willing to risk 3% of your total capital BUT now your RISK REWARD RATIO is 1:3
What that means? That means that you are risking 3% to make 9% and with even lower win ratio you can be still profitable,you can survive this long term game!
-Lets say you have 60% win ratio like in previous situation but with 1:3 RISK REWARD RATIO.You won 6 trades and lose 4 BUT you lost 4% and you make 18% and at the end that is +12% of total return on your capital.You see same win ratio percentage but with way more better results than with 1:1 RISK REWARD RATIO!
-You lost 40$(4% of total account balance) and you win 180$(18% of total account balance).
-You put stop loss lets say 50 pips and you put take profit at 150 pips for example.
3.Let winners run and cut your losses at proper time!
-Lets say you put your stop loss 100 pips above you sell order and the price went strong bullish and you see that the price will hit your stop loss but you hope that trend will reverse or something like that,...Don't do that! WHY?
In trading you should be aware that your emotions will affect your final results!
-When trading you will feel lot of different emotions such as;fear,joy,hope,greed,impatience and so on.
Let me explain something about that emotions for you!
-FEAR-You face fear in few situations,first situation is when your trade is in profit but you have fear of losing that trade and you close with few pips in profit instead letting it run until profit target,...Second situation where you face fear is when you put too much orders of same pair and all pairs went in negative direction.
-ADVICE FOR YOU:Risk amount that you can cover with win trades,lets say risk 1 to get 3 and if you lose 3 trades you will cover your loses with that one trade and do not open to much same positions!
-JOY;Joy is good in life but in trading can be very very bad!WHY???
Lets say you won 3 trades in the row and now you feel very happy and you think that you are master of trading now,...In next trade you decide to put bigger lot and you lose that trade,What now? In one trade you lost all your profit from your previous win trades or even more!
-ADVICE FOR YOU:Sometimes you will win sometimes you will lose but that is part of the game,it is okay to celebrate your wins but you need to be aware that loses are part of the game too.Also when you win some trades do not increase your lot to much because you think you are now master of forex.
-HOPE;It is good to have hope in life(health,health of your family) but in trading hope can erase you all account balance!HOW?
-Lets say you put trade and you see that trade is going in wrong direction and you know that price will hit your stop loss but you HOPE that trend is going to change somehow but at the end you ended up with loss,and you known that you are going to lose and you did not cut off that trade because of HOPE!
-ADVICE FOR YOU;Cut off your losing trades and let your winners run!
-GREED;Remember this;BEARS WIN,BULLS WIN BUT PIGS ALWAYS GET SLAUGHTERED!-What that means?Pigs are greedy and greed will destroy your confidence and your account balance.
-ADVICE FOR YOU;Let your winners run and don not be greedy when you see little profit and you decide to close the trade,do not over trade,if you have bad day,you have more loses than wins,do not trade more because all you want is profit.You will have new opportunity tomorrow!
-IMPATIENCE:Impatience is big enemy of traders!Always be patient and disciplined about your trading!
4. 30% AND STILL PROFITABLE?-Do not focus on money focus on %
-I will show you simple formula how to calculate your RISK REWARD RATIO and this is how it goes;
-1:3 risk reward ratio with 30% win rate, so you have 7 loses and 3 wins if you take 10 trades.
= -7x1+3x3
= -7+9
= +2%
I will explain you why is like this;
-You lose 7 trades and per every trade you lose 1% so you lost 7 trades and that is 7%
-You won just 3 trades BUT with 1:3 risk reward you get for every win 3% in return so that is 3x3=9%
At the end you ended up with +2% in profit with just 30% win rate!
Lets do another example but with 1:4 RISK REWARD RATIO
-1:4 risk reward ratio with 30% win rate,you lose 7 and you win 3 if you take 10 trades.
= -7x1+3x4
= -7+12
= +5%
-Look at this now 30% win rate and you are still profitable!
-With 1:4 risk reward ratio you can lose 7 trades and win JUST 3 trades and you are still profitable!
-You lose 7(-7x1 ) trades but for every trade that you lose,you lose 1% and for every win trade you win 4% in return so that is 3x4=12
-At the end you ended up with +5% in profit with just 30% win ratio!
5.CONCLUSION
At the end i will tell you what you need to learn from this;
-Don not risk more than 3%
-Focus on RISK REWARD RATIO
-Do not let emotions ruin your trading
-Do not focus on money focus on %(total return at the end of trade)
THANK YOU SO MUCH FOR READING THIS TUTORIAL ABOUT TRADING PSYCHOLOGY!
-If you like this content please support me with like and follow me for more new tutorials and analysis!