Risk/Reward Ratio, Risk Appetite , How To Use And Calculate In Crypto Currency
Asslam-0-Alikum |
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Greetings from me to all the members and wishing everyone good health and i hope all are well like me and doing well work.Today's I'm again here and I'm going to share risk/reward ratio in crypto currency and also share how to use it.
Risk/Reward Ratio.
In cryptocurrency risk or reward ratio is basically the sum of the possible return and this return is basically the amount and the amount is that who are involved in the risk.It can also express as the possible return of the total amount ratio.
How To Calculate?
To calculate the risk/reward ratio, you must first determine the expected return on investment. You do this by estimating the future value of the asset and calculating the difference between the present value and the expected future value.
When we want did any trade we have know that how much risk we are taking on that trade we are going to do.We have to know that the minimum and maximum risk of trade before doing any trade and we have to know that if we went in loose then how much money would be loose.By doing these things we can better understand the risk in the trading.
Risk Appetite.
When we did any trade first of all we know the risk appetite in the trading.When we know the risk of our trading then we start to check the PRs of our trade that we are going to do and in this case we also check that our risk appetite is according to the trading amount.If we can take more risk then we look for trades with an RR ratio of 1:2 or less.
Once we did trader and the another trader has determined the value of a trade, then we can easily determine whether or not the trade is worth it. If the RR ratio is 1:2 of the trade.This may be high value taking the trade.
How To Use?
Before going to know how to use this first Then of all we have to know the ideal ratio.Ideal of the trade ratio will be taken from one trader to another trader, but most of the traders want to trades with an RR ratio of at least 1:2. This means thay don't want to give him for amount of €1 on trade risk.
The use of the risk reward is very complex and every trader has to follow all the legal rules and firstly know the risk and then check the amount on the risk and then take this risk.
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