Risk Reward Math,
Are you trading with proper Risk/Reward Ratio?
Yes ,Then You already Know how to calculate
Example-
Suppose you are open your position in Nifty for target 7267,stop-loss is 7612(closing basis) and sell entry price is 7558.
Risk/Reward=(Target-Entry)/(Stop loss-Entry)=abs(7267-7558)/ (7612-7558)=5.38.
Case I-Sometimes stock./market trigger your stop loss and return to their path in that direction you have taken your position.
If you are too emotional in your trading then you decide to wait for Next day or wait for second confirmation suppose say nifty at 7439.
Next Day market suppose gap down at 7400.Then it is our Human behavior or ego to skip that day and wait for bounce to 7500/7558 next Day.
Again next day suppose Nifty opens at 7385 and again drift down.So we missed that opportunity wait for next signal.
Case II-Suppose you have taken your position in mind that 7612 stop loss on closing basis.Nifty suppose crosss 7612 by 20 points then you don't know the next resistance.So you may reverse your position.
So what???
Most important things is that if you don't know the oscillation of that specific stock/index,then you missed that opportunity or Trade in Buy side at 7630. So before taking the trade know that where is heading stocks/indices are.
Are you trading with proper Risk/Reward Ratio?
Yes ,Then You already Know how to calculate
Example-
Suppose you are open your position in Nifty for target 7267,stop-loss is 7612(closing basis) and sell entry price is 7558.
Risk/Reward=(Target-Entry)/(Stop loss-Entry)=abs(7267-7558)/ (7612-7558)=5.38.
Case I-Sometimes stock./market trigger your stop loss and return to their path in that direction you have taken your position.
If you are too emotional in your trading then you decide to wait for Next day or wait for second confirmation suppose say nifty at 7439.
Next Day market suppose gap down at 7400.Then it is our Human behavior or ego to skip that day and wait for bounce to 7500/7558 next Day.
Again next day suppose Nifty opens at 7385 and again drift down.So we missed that opportunity wait for next signal.
Case II-Suppose you have taken your position in mind that 7612 stop loss on closing basis.Nifty suppose crosss 7612 by 20 points then you don't know the next resistance.So you may reverse your position.
So what???
Most important things is that if you don't know the oscillation of that specific stock/index,then you missed that opportunity or Trade in Buy side at 7630. So before taking the trade know that where is heading stocks/indices are.
Note-Soch Samajh Kar Invest Kar and control your Greedy and fear(human Behavior)
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