FOREX Trading Risk/Reward Ratio

Discussion in 'Forex - Currencies Forums' started by thedeatheater1410, Feb 15, 2016.

  1. thedeatheater1410

    thedeatheater1410 Member

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    It is generally very important to assess the risk versus reward ratio in any investment. FOREX trading is no different to it. By assessing the risk reward ratio we can before hand predict any possible losses or rewards, and thus ensure that our investment is more effective. So how do you go about assesing risk and reward with regards to FOREX?
     
  2. Corzhens

    Corzhens Senior Investor

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    As I see it, the most risk that one faces in forex trading is the stability of the country. When we went to Thailand for a tour in 2013, my wife had bought a lot of Thai Baht. She had miscalculated our expenses for the 4-day tour and she was left with a lot of Baht when we came home. No problem, let's just go to the bank or money changer. But unfortunately, the money changer had a very low exchange rate. So instead of losing in the exchange, we still have those Thai Baht with us until now, waiting for the exchange rate to be better.
     
  3. anders

    anders Well-Known Member

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    LOL, people do PhDs to figure this out. This is why Wall Street hires some of the smartest people in their cohort to work for them. There's no way to answer this question on a bulletin board, except to say that you need to get a basic grounding in trading theory then spend a lot of time actually investing real money in real markets to gain experience and figure out what actually matters and what doesn't. Big field of expertise, no easy solutions.
     
  4. fxnews247

    fxnews247 New Member

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    Forex market is risky for newbie. Because of newbie trader can not manage their money, so they are loser. They have not good strategy. Money management is best strategy for forex trading. I earn a lot money from forex trading. I am nine years experienced of the market.
     
  5. gracer

    gracer Senior Investor

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    I too am very out of knowledge when it comes to Forex trading so I can't give any advice on how to assess risks and rewards ratio on this kind of trading. I guess the only thing I could say is for investors to be very wary and do a lot of research first before entering any kind of investment. :)
     
  6. remnant

    remnant Well-Known Member

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    Calculation of the risk/reward ratio requires one to analyze stocks over a long period of time or use the services of an acturial scientist both of which are untenable. Professional risk managers see themselves as risk managers and risk management is their top priority. The best method to calculate this ratio is to use the reward/risk ratio calculator found at Trade.com.
     
  7. radex78

    radex78 Senior Investor

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    In forex trading some tarder might they use risk reward ratio 1:1 to manage their risk and target, it's mean any trader if they put stop loss distance 20 pips so they also will put target profit 20 pips too, and with this risk reward ratio if trader having more than 50% accurate hence will get profit on last period of time, but some another might use 1:2 or higher risk reward ratio, it will depending with each trader decision
     
  8. Linda Smith

    Linda Smith Senior Investor

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    In forex trading some traders might use risk reward ratio 1:1 to manage their risk and target, it's mean any trader if they put stop loss distance 20 pips so they also will put target profit 20 pips too, and with this risk reward ratio if trader having more than 50% accurate hence will get profit on last period of time, but some another might use 1:2 or higher risk reward ratio, it will depending with each decision. A suitable broker like Tpglobalfx can help them to make decision about risk/reward ratio.
     

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