馃殌馃殌*1. Risk Planning - Trading Risk Reward Ratio **
Planning your risk will help you maintain consistency with the risk we take trading the markets. Becoming a consistent trader is one of the biggest hurdles that you need to conquer and it can only be done right from day one if you plan your risk exposure.
We need to be able to answer one simple question: *How much are you willing to risk per trade?
The answer to this question is a personal preference and it comes down to your risk tolerance. However, professional money managers recommend NOT RISKING MORE THAN 2% on any particular trading idea.
How to determine the risk-dollar amount :
Risk BTC Amount = Account size * %Risk
For example, if your account balance is $10000 and your risk tolerance is 2% your BTC. Risk amount is $100 per trade.
Risk BTC Amount = $10000 x 2% = $100
By calculating the risk-dollar amount we can ascertain how much we're going to lose if the trade goes against us. In our particular case, the maximum loss would be $100 .