Look for the Risk Reward Ratio (Trading Lesson)

Home / Basics / Look for the Risk Reward Ratio (Trading Lesson)

Stop looking at the prices, a stock moves from 500 to 520 while a stock moves from 10 to 11, which one would you choose for trading? trading and investing are completely different and there is no necessity for an investor to sell their stocks every week. Trader has the short term mindset and need to make week’s profits , no matter how difficult it is. Identify you are an investor or trader and look for the risk-reward ratio.

If you put your money today and there should be 30 percent profits, thats a good return. Less than that is not worthy and its wasting your time. Look for the trading opportunity and don’t look for the prices instead try looking at the profit percentage. This day you are going to make 3 percent in one day and it’s enough. That is the maximum you can get and its good to book profits when you get it. Trader shouldn’t have the long term focus and the investor shouldn’t have the short time mindset. If you invest, just forget about for another 5 years.

I have a simple formula explained in my e-book 2ideas4stocks to prepare for the day by choosing the right chart patterns and it works most of them. Trading is always related to psychology, what we call resistance and support are related to the trader’s greed and fear. If you plan for 3 percent then your goal to get rich is possible within a year. Never trade or do business against the trend and it kills!

Have your investment account and trading account separate because you will always keep changing your mindset. it’s tough to manage the money. Keep trying to make profits and you can!

Get my ebook on stock trading from amazon.com 

Spread the love