You are currently viewing RISK REWARD Ratio In Trading

Trading in Stock markets, especially with derivatives has inherent risks. These risks can be mitigated by careful planning with the “Size Of Trade” and where one perceives the market to be at that particular time.
The risk-reward ratio is a popular concept in trading that refers to the potential profit (reward) compared to the potential loss (risk) of a trade. It is a critical metric used by successful traders to evaluate the potential profitability of trade and manage their risk.
There are various methods in use to determine RISK in trade. Derivatives are tools that can be used for hedging your bets. Technical analysis of whether Elliot Wave OR Overbought and Oversold can be used to increase and decrease one’s exposure.

Above is a generalized method of determining your exposure in markets with the help of Elliot Wave Analysis. However same can be done with numerous literally hundreds of traditional technical indicators. It is important to note that any methodology you may choose to become successful requires discipline, perseverance, and more than anything else, your chosen method must be SIMPLE.
One also must keep in mind that elliot wave is subjective. You may not get results every time. Therefore your trading methodology must have a built-in system for DEALING WITH SURPRISES.