 In my blog to date, I've given a general overview of trading and hopefully built some kind of a foundation and an understanding for new wannabe traders. You should now at least be aware of what it might take for you to become a consistently profitable trader. Do you believe that you are willing to put in the work and make the sacrifices it takes to become one of the 5%ers? **To achieve any goal, you have to discover the price that you will have to pay to achieve it, and then you MUST pay that price!**  # Now, let us continue. To be a profitable trader you do not need to win every trade. Allow me to introduce you to Mr or Ms **Risk:Reward**. From now on they will simply be know as **R:R.** *In your trading it is R:R that will make you a consistently profitable trader.* R:R will be your friend, if you allow it to be. # Let me explain, please. * If you Risk $10 on a trade and you make $10 from that trade, then your R:R was 1:1, as you risked $10 to make $10. * If you Risk $10 on a trade and you make $20 from that trade, then your R:R was 1:2, as you risked $10 to make $20. * If you Risk $10 on a trade and you make $30 from that trade, then your R:R was 1:3, as you risked $10 to make $30, and so on. *So, lets say your trading method produces a win ratio of 50%, meaning you only win half of the time. Therefore after 10 trades you would of had 5 wins and 5 losses.* * From these 10 trades, in the first case with R:R of 1:1, you would make $50 (5 x $10), and loose $50 (5 x $10)- so you make $0 (Break Even or BE). * In the second case with R:R of 1:2, you would make $100 (5 x $20), and loose $50 (5 x $10) - so your profit after 10 trades is $50. * In the third case with R:R of 1:3, you make $150 (5 x $30). and you loose $50 (5 x $10) - so your profit after 10 trades is $100. **That is the power of R:R!** At an R:R of 1:2 and above, you only need to win half the time to make money. To make larger profits, you just need to increase your stake, or increase your R:R, or increase your win ratio. Run some figures for yourself and you will see that you can even **lower your win ratio** (ie. loose more that half your trades), and still make a profit, _**if you increase your R:R.**_  In the next installment, I will go about showing you how to set up your R:R for trading. [images source](http://pixabay.com)
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| author | anmeitheal |
| permlink | it-s-all-about-risk-reward |
| category | risk |
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<p>Congratulations! This post has been upvoted from the communal account, @minnowsupport, by anmeitheal from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, someguy123, neoxian, followbtcnews/crimsonclad, and netuoso. The goal is to help Steemit grow by supporting Minnows and creating a social network. Please find us in the <a href="https://discord.gg/HYj4yvw">Peace, Abundance, and Liberty Network (PALnet) Discord Channel</a>. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.</p> <p>If you would like to delegate to the Minnow Support Project you can do so by clicking on the following links: <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=102530.639667%20VESTS">50SP</a>, <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=205303.639667%20VESTS">100SP</a>, <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=514303.639667%20VESTS">250SP</a>, <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=1025303.639667%20VESTS">500SP</a>, <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=2053030.639667%20VESTS">1000SP</a>, <a href="https://v2.steemconnect.com/sign/delegateVestingShares?delegator=&delegatee=minnowsupport&vesting_shares=10253030.639667%20VESTS">5000SP</a>. <strong>Be sure to leave at least 50SP undelegated on your account.</strong></p>
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