Irish Born Investor's avatar
$16.7m follower assets
Risk vs Reward
If you make make 100 Trades with a starting amount of $100. The order of the wins and losses doesn't matter.

You lose 1% each time on 74 of those trades.

You gain 3% each time on 26 of those trades (compounding the principal).

You will finish up 2.5% even though you've been wrong 74% of the time.

Now if you think to yourself. I'm better than that I can improve my results.

So we'll say you're still wrong 74% of the time but you manage to pick better winners and hold them longer and you make 10% on each winner.

You will return 460%.
Preston | Investor Insight's avatar
Risk to reward ratio is what separates the successful from non successful. I love 3/1+ risk to reward for swing trades and 5/1+ for long term investments.
Green Candle Investments's avatar
Great way to look at risk/reward. Love the insight!

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