2022-12-09 08:04:07
Here’s Why You Need Proper Risk Management In Trading
Imagine there are two traders, Saja and Java . They both start with a $1,000 account. Saja is an aggressive trader and he risks $250 on each trade. Java is a conservative trader and he risks $20 on each trade. Both adopt a trading strategy that wins 50% of the time with an average of 1:2 risk to reward. Over the next 8 trades, the outcomes are Lose Lose Lose Lose Win Win Win Win.
Here’s the outcome for Saja:
-$250 -$250 -$250 -$250 = BLOW UP
Here’s the outcome for Java:
-$20 -$20 -$20 -$20 +$40 +$40 +$40 +$40 = +$80
Do you see the power of risk management? So here’s the deal: As a trader, you’ll encounter losses regularly. But with proper risk management, you can contain these losses till it feels like an “ant bite”
Try our service for a week trading
The Trading Zone @Sajafx
156 viewsedited 05:04