About Day Trading: Calculating Your Risk To Reward Ratio
 | from Adam Milton
Professional traders know that risk management is one of the most important aspects of their trading, but many beginning traders do not even know what risk management is (hence they lose money). This week's trading newsletter discusses two elements of risk management (namely the risk to reward ratio, and placing stop loss orders), and explains how they affect your trading. This week's newsletter includes: - the definition and calculation of the risk to reward ratio, - a discussion of how (and how not) to place stop loss orders, - and the weekly economic calendar with volatility expectations. Good trading everyone :-)
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In the Spotlight | Risk To Reward Ratio
Risk management is the process of managing (read as reducing) the risk of a trade so that it is more likely to be profitable. Professional traders know that risk management is one of the most important aspects of trading, but it is often overlooked by new traders to their detriment (e.g. their blown up trading account) ... learn about the risk to reward ratio
| | How To Place Stop Loss Orders
Stop loss orders (also known as stop losses or stops) are used to exit a trade if the trade starts to lose money (i.e. if the market moves against the trade). Regardless of what you may be told by other traders, stop loss orders should be used with every trade, without expection. The excuses that are often given for not using stop loss orders (such as targeting of stops by other traders, or reduced profit when using stops) can be overcome by placing stop loss orders at less obvious prices (i.e. not where all the other stops are) ... find out how to place stop loss orders
| Economic Calendar With Volatility
This week's economic calendar includes only a few news releases from the US and Asia, but many news releases from Europe. The US and Europe have six high volatility news releases each, while Asia only has three high volatility news releases. Markets from all three regions will most likely continue experiencing high volatility throughout this week, which should result in significant price movement for many markets (stock indicies, stocks, currencies, etc.) ... view the full economic calendar
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