In order for you to profit in the Stock Market, you need to be a Risk Taker. However, in order to survive it…You need to be a Risk Manager.
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Calculating your risks before entering a trade is a fundamental skill that needs to be learn early on. By knowing the Risk/Reward ratio, you will be able to discern if your particular set up is a winner or not.
To properly set it up, you need the three mandatory variables
- Entry Price
- Target Price
- Stop Loss Price
Refer to my article Risk Reward Ratio–How Much Risk Are You Willing to Take for a Reward? if you want to know the gritty details of the calculation. If you prefer the smart/easier path, use this calculator - Risk Reward Ratio Calculator.
