How is the profit and loss ratio calculated? Let me give you a simple example.

When you enter a position, no matter the market price or the pending order, as long as it is traded at the predetermined position, you may lose one dollar, but you may also earn two dollars. In this case, the profit and loss ratio is 2:1, which is a very worthwhile trade.

This is why I often say repeatedly in my analysis articles: if the profit and loss ratio is good and the direction is certain, then do it; if the profit and loss ratio is not good, wait and see, and wait for a position with a better profit and loss ratio.

Some pending orders are actually placed at a position with a good profit and loss ratio.

Let me give you another counterexample: Some people tell you that if you enter this position, you may earn 50 cents, but at the same time you may lose one dollar.

Would you do such a trade?

It’s a very simple truth