Risk Management And Psychology
Unlocking the Ultimate Secret to Profitability.
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๐ 6:05 PM
๐
Apr 08, 2025
โ๏ธ By 0xKpoya
Before you apply this, make sure you have a trading system that works, your win rate doesn't have to be high, Maybe 40% .
Out of 10 trades you know you can get at least 4 profitable trades and above, then all you have to do is apply this plan below
NOW THE PLAN๐
Let's say your Trades gives you an average Risk to Reward of 1:3 and above.
Risk to Reward Ratio(RRR) is way of measuring potential profit to potential loss .
Example: if you have a 1:3RR setup
This means that if you are risking $100 per trade, your potential profit will give 3x of that $100, so if you lose the trade you lose $100, you win and you get +300$ that is 1:3RR
So if it's a 1:5RR trade , you are risking $100 to make $500, and so on.
Now apply this to your trading account like this๐
Let's illustrate this using $10,000 account
Trading just 1:3RR setups
With a win rate of 40% and a fixed Risk amount of $200 per trade.
Now you took 10 trades , Worst case scenario You lost 6 trades and you won 4 trades , all of which were 1:3RR setups and above
If you Lost 6 trades
your risk is $200 per trade 200$ x 6 = -$1200
You won 4 trades , each of this 4 trades were 1:3R trades, 3R x 4 = 12R
Your fixed risk is $200 so you have $200 x 12R = $2400 profit.
At the end of the week you lost 1200$ from 6 trades and you made $2400 from 4 trades.
Now when you subtract $1200 from $2400 = 1200$
Your Account balance should be $11,200, you have $1,200 profit.. sometimes you might even get a 1:5R setup and above, still stick to your $200 risk and Maximize your profit.
If you can maintain this consistently , follow the plan with Discipline see how you will become profitable overtime, regardless of your account size .