Introduction of Risk Reward Co -Co -Co -Objective in a cryptocurrency store: Step by step guide
The cryptocurrency trading world is becoming more and more popular and competitive, and many investors want to increase profits while reducing losses. One of the key strategies that can help achieve this balance is the introduction of a reward factor in your store. In this article, we will explore how to do this by providing a detailed guide on how to calculate, manage and optimize the risk compensation ratio.
What is the risk reward ratio?
The risk -reward ratio is the percentage of potential rewards that you expect for each risk unit. This is the measure of how many benefits you can expect from the store or investing in the amount of money in Cuba. A good reward factor indicates that your harvest is proportional to your loss and not overdo it with you.
Why introduce a risk -reward ratio?
Introducing a wage relationship on the main risk of cryptocurrency in the store for several reasons:
1
Risk Management : By determining a clear risk reward factor, you can manage market volatility and reduce potential losses.
- Diversification : A well -introduced risk reward coefficient can help you diversify your portfolio by giving your capital a variety of classes or property strategies.
3
Increased Confidence
: If you have a stable risk reward ratio, you will feel more confident than your trade decisions, and it is less than impulsive rates.
Calculation of Remuneration Ratio
To calculate the risk -award ratio, follow these steps:
1
Determine maximum risk performance : Calculate the percentage of possible losses you are ready to accept before deciding to close the store.
- Set the expected benefit : Determine which profit you expect from each store or investment.
3
Calculate Risk : Use the following formula to calculate the risk:
Risk = (maximum loss / maximum increase) \* 100
For example, if you trade a cryptocurrency with a maximum loss of $ 10,000 and the expected benefits of 20%, the risk will be calculated as follows:
Risk = ($ 10,000 / 0.2) \* 100 = 5,000,000%
- Determine your reward : Calculate your reward based on the expected profit.
Prize = Predicted Profit \* (1 – Risk)
For example, if you trade a cryptocurrency with the estimated benefit of 20% and 10%, the reward should be:
Reward = 0.2 \* 100 = 20%
- Create a risk -reward ratio : Combine the calculated risk, reward, maximum loss and expected benefit to create your own risk and reward.
Risk Reward Ratio = (Maximum Loss / Maximum increase) \* (1 – Risk)
For example:
Risk Remuneration Ratio = (10,000 USD / 0.2) \* (1-5,000%) = 20%
Risk Reward Management
Consider the following strategies to maximize the risk and reward factor:
1
Average dollar arrival : Invest in a fixed amount of money at regular intervals to reduce the impact of market volatility.
- Position Size : Increase or decrease position size based on risk ratio and reward to make sure you are not exaggerating it.
3
Ordering
: Set the loss stops to limit potential losses if the store is not working as expected.
- Risk Restricting : Use defense strategies to reduce market volatility or protect from unexpected losses.
Risk Reward ratio Optimization **
Consider the following factors to optimize the risk -reward ratio:
1
Market Terms : Adjust the risk -reward ratio in response to changing market conditions.
- Strategy Efficiency : Analyze the work of different strategies and adjust your risk ratio and reward.
3
Capital Distribution : District Your capital between different assets class or strategy based on your remuneration ratio.