Risk:Reward > Pip count !!! | Bitcointalksearch.org

tbterryboy

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Quote from: andreibi on July 19, 2020, 10:20:34 AM

Risk to reward ratio strategy:
Buy some Bitcoin for $1000 with a profit target of $1200 and set a stop-loss at $900, the risk-reward ratio is 1:2 (or 2R in trading parlance, $200 divided by $100) because you're risking $100 to make $200.

That’s something that google already says. Would have been better for the newbies if you could explain it in your own word but never mind let me do it for you. Basically, risk reward ratio which is also referred to as RR ration is the prospective reward that an investor can receive for every dollar, he/she risks on the investment. It is basically the risk that someone would have to take to earn a certain amount of profit.

This helps the trader to plan the strategy and play safe while having higher possibility of earning profit and avoiding loss. The rest can be understood from the example you provided.

Risk and reward ratio is something we must track all the times. When losses in trading is inevitable, we must focus on cutting the lose earlier as per TA and must get out of the emotions as well and must focus on next trade to make our capital into its original state so that future trades will be focusing on better rewards.

CucakRowo

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Quote from: ?? on ??

[-snip-

~~May i know why you only do quote without any further comments? Any interesting words/statement from that quoted post?~~

Nice. Guess you suddenly click publish button after quoting. Grin

NotATether

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Quote from: slaman29 on August 01, 2020, 02:07:52 AM

Quote from: Lordhermes on July 31, 2020, 04:31:18 PM

Seeing people replied about setting pips, ratio of stop loss to trading, and considering trading pair, I have a question to ask, isn't it forex market that has pips study, ratio settings strategy. I have only come across market makers and market takers in crypto trading, how does pips, ratios concise with crypto, which crypto exchange supports pips and ratio setting. Never see me as fool for asking this.

I think you can talk about ratio in crypto trading too, why not? And yes, pips came from forex, but so did all the other terms I believe, and they actually could have come from stock markets in the first place.

Pips just stands for PRICE INTEREST POINTs:) So OP is telling people not to just rely on this (it's also harder to count I guess as pips moves are crazy in BTC!).

The pip value of BTC/USD is $0.01 USD per lot. Nobody really trades BTC against EUR in crypto markets so there isn't a pip value for it that I know of. Almost all crypto trading is done against the US dollar.

Also I don't agree that it's better to compare risk:reward ratios, it will lead to traders setting unrealistically high price targets that never get realized and just hit the stop loss. 1:1 and 1:2 risk-reward ratios are safe, it should not be too high. On the contrary it is safe, and clearly desirable, to express your profits in terms of pips.

Quote from: Lordhermes on July 31, 2020, 04:31:18 PM

Never see me as fool for asking this.

Don't worry there are no foolish questions when discussing trading, we all (and myself admittingly) are learning from each other's experiences to be honest.

Bright_dhykseen

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Quote from: Lordhermes on July 31, 2020, 04:31:18 PM

Seeing people replied about setting pips, ratio of stop loss to trading, and considering trading pair, I have a question to ask, isn't it forex market that has pips study, ratio settings strategy. I have only come across market makers and market takers in crypto trading, how does pips, ratios concise with crypto, which crypto exchange supports pips and ratio setting. Never see me as fool for asking this.

Pip is a unit of measurement in the market. I trade forex majorly and I also trade cryptocurrency via my broker. I believe the pip count and R:R also apply in the crypto market. you can check out the pip count of a pair on tradingview and MT4

slaman29

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Quote from: Lordhermes on July 31, 2020, 04:31:18 PM

Seeing people replied about setting pips, ratio of stop loss to trading, and considering trading pair, I have a question to ask, isn't it forex market that has pips study, ratio settings strategy. I have only come across market makers and market takers in crypto trading, how does pips, ratios concise with crypto, which crypto exchange supports pips and ratio setting. Never see me as fool for asking this.

I think you can talk about ratio in crypto trading too, why not? And yes, pips came from forex, but so did all the other terms I believe, and they actually could have come from stock markets in the first place.

Pips just stands for PRICE INTEREST POINTs:) So OP is telling people not to just rely on this (it's also harder to count I guess as pips moves are crazy in BTC!).

pawanjain

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I really liked this concept of risk to reward and I am surely going to try it out very soon.
I already knew about the concept but never bothered to learn about it since I always focused only on my targets.
But now I am quite fascinated with this concept. Can anyone guide me where I can learn more about this and implement it properly.
Is there more techniques through which this method will benefit me the most.

Savemore

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Quote from: lixer on July 31, 2020, 02:37:39 PM

Quote from: Bright_dhykseen on July 19, 2020, 08:04:17 AM

I see traders boast about the Amount of pip they made in the market but I believe what should matter to you as a trader is your Risk to reward ratio.

If you are changing your instrument of trade as a result of the pip-move of a pair/currency, I think you should re-think your decision and factor in Risk to reward.

So many traders are not profitable yet because they fail to understand this.

It's high time traders stop chasing shadows.

I agree with your point. Most of the successful traders only show their great profits to the community and this makes the new traders think that making profit is easy in crypto market. And this often turns into disappointment and discouragement of the trader when the lose their capital in trading. Profits are high, but so are the risks.

So, all the traders should mention their risk to reward ratio so that the newbies can understand the market and its volatility (unstable behavior) and the risk factor involved before they pour in their capital.

The ideal risk and reward ratio is 2:1, the higher the reward the better but make sure that the risk is low what is that mean? It means that every trade, your target profit is twice or more as your stop loss levels. The risk and reward ratio is important not just in risk management and also it can help you to identify if a certain trade is a worth it or not. I do not trade altcoins with a low reward because for me the risks are too high and it is not worth it to trade.

Lordhermes

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Seeing people replied about setting pips, ratio of stop loss to trading, and considering trading pair, I have a question to ask, isn't it forex market that has pips study, ratio settings strategy. I have only come across market makers and market takers in crypto trading, how does pips, ratios concise with crypto, which crypto exchange supports pips and ratio setting. Never see me as fool for asking this.

lixer

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Quote from: Bright_dhykseen on July 19, 2020, 08:04:17 AM

I see traders boast about the Amount of pip they made in the market but I believe what should matter to you as a trader is your Risk to reward ratio.

If you are changing your instrument of trade as a result of the pip-move of a pair/currency, I think you should re-think your decision and factor in Risk to reward.

So many traders are not profitable yet because they fail to understand this.

It's high time traders stop chasing shadows.

I agree with your point. Most of the successful traders only show their great profits to the community and this makes the new traders think that making profit is easy in crypto market. And this often turns into disappointment and discouragement of the trader when the lose their capital in trading. Profits are high, but so are the risks.

So, all the traders should mention their risk to reward ratio so that the newbies can understand the market and its volatility (unstable behavior) and the risk factor involved before they pour in their capital.

gabbie2010

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Quote from: Bright_dhykseen on July 19, 2020, 08:04:17 AM

I see traders boast about the Amount of pip they made in the market but I believe what should matter to you as a trader is your Risk to reward ratio.

If you are changing your instrument of trade as a result of the pip-move of a pair/currency, I think you should re-think your decision and factor in Risk to reward.

It's high time traders stop chasing shadows.

In my view too. apart from ratio reward to risk management I believe calculating the number of pips is also good rather than having only profit made in mind. Some traders can use a huge lot size to trade just because of the profit they are chasing but if you trade based in pips and reduce your risk appetite, I think is also RR

The numbers pips count does not necessarily amount to making profits such numbers of pips was equally traded with a wide stop loss I agreed with the schools of thougth that a good Risk to Reward ratio is most important for a trader having an edge over the market, a 1:3 risk to reward ratio profits made in 5 trades iwill equally ended up in profits after losing 5 trades in a nutshell the numbers of pips is not a yardstick for making profits the longer term of profit taking via risk to reward ratio supercede counting the number of pips.

Bright_dhykseen

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Quote from: CucakRowo on July 19, 2020, 11:03:16 AM

True indeed. Someone who want to build their trading portfolio should think more about RR ratio rather than win-loss ratio. Even though his/her win-loss ratio is small, if the RR ratio is big. I'm sure that trader has already gotten some nice profit. Some example (using same lot). If the win ratio is big, but the RR ratio is below (minimum) 1: 2 (as mentioned above my post). I am sure, that trader has experienced losses or at least BE (without profit). But if his/her win ratio (let say) 35%, but his/her RR ratio is big, then that trader has gain nice profits. If a trader has a good score in both's (win-ratio and RR ratio), then I can call him/her as a reliable trader.

The risk-to-reward ratio and Win-loss ratio work hand-in-hand.

A large risk-to-reward ratio doesn't require a high win rate and vice-versa.

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Quote from: Bright_dhykseen on July 19, 2020, 08:04:17 AM

I see traders boast about the Amount of pip they made in the market but I believe what should matter to you as a trader is your Risk to reward ratio.

If you are changing your instrument of trade as a result of the pip-move of a pair/currency, I think you should re-think your decision and factor in Risk to reward.

It's high time traders stop chasing shadows.

In my view too. apart from ratio reward to risk management I believe calculating the number of pips is also good rather than having only profit made in mind. Some traders can use a huge lot size to trade just because of the profit they are chasing but if you trade based in pips and reduce your risk appetite, I think is also RR

The amount of pip you make in the market doesn't matter at all.

For Example, If you make 200 pips in the market with a 100 pips stoploss, you are less profitable than someone who made 15 pips with 5 pips stoploss.

PS: Your stop-loss and % of account risked determines the lot-size you use. A huge lot size can be used following proper-risk calculation/management.

So many traders are not profitable yet because they don't understand this.

leyton11

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Every trader should know that the risk and reward ratio. I usually use Ratio 1: 3 (1R and 3W), which is a big win rate but it will be the case that I use this ratio. When the indicators have given a clear signal, I will use large leverage to execute that trade.
in particular, the 1: 2 ratio should not use large leverage in the crypto market because sharks will often manipulate very strongly, then the probability of us losing is very high. so be careful when using big leverage in the crypto market.

slapper

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I agree with you. Risk:reward ratio is way more important that counting pip. I have been in trading for many years and most of signals only focus on pip calculating and they dont give a damn on R:R. This is a huge mistake which can easily lure newbies and make them lose a huge amount of money. Typical R:R is 1:1.5. If you are more confident in yourself, 1:2 or 1:3 is much more profitable. And always remember to set stop loss in every trade. My R:R is 1:2 and this gives me 20% monthly. Not a big number but that is enough for me

CucakRowo

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True indeed. Someone who want to build their trading portfolio should think more about RR ratio rather than win-loss ratio. Even though his/her win-loss ratio is small, if the RR ratio is big. I'm sure that trader has already gotten some nice profit. Some example (using same lot). If the win ratio is big, but the RR ratio is below (minimum) 1: 2 (as mentioned above my post). I am sure, that trader has experienced losses or at least BE (without profit). But if his/her win ratio (let say) 35%, but his/her RR ratio is big, then that trader has gain nice profits. If a trader has a good score in both's (win-ratio and RR ratio), then I can call him/her as a reliable trader.

andreibi

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Risk to reward ratio strategy:
Buy some Bitcoin for $1000 with a profit target of $1200 and set a stop-loss at $900, the risk-reward ratio is 1:2 (or 2R in trading parlance, $200 divided by $100) because you're risking $100 to make $200.

Bright_dhykseen

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I see traders boast about the Amount of pip they made in the market but I believe what should matter to you as a trader is your Risk to reward ratio.

If you are changing your instrument of trade as a result of the pip-move of a pair/currency, I think you should re-think your decision and factor in Risk to reward.

So many traders are not profitable yet because they fail to understand this.

It's high time traders stop chasing shadows.

Topic: Risk:Reward > Pip count !!! (Read 199 times)