What is the risk/reward ratio in cryptocurrency trading, and how to use it
Cointelegraph
Published May 08, 2023 11:38AM ET
Updated May 08, 2023 02:20PM ET
The risk/reward ratio or risk/return ratio is a commonly used metric in trading that compares the potential profit of a trade with the potential loss. That said, it’s the reward traders stand to make for the risk they take.
For example, an investment with a risk/reward ratio of 1:3 would mean that for every dollar the investor spends, they gain three dollars if the trading goes in their favor. The risk/reward ratio is decisive to cryptocurrency trading, whether for daily trades or crypto investment for the long run, known as “hodling.”
h3 Entry price: $2,000 /h3 h3 Stop-loss: $1,800 /h3 h3 Take profit: $3,000/h3Continue Reading on Coin Telegraph
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Written By: Cointelegraph
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
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