Implementation of the Risk Relationship Relationship in the cryptocurrency store: Step by step guide
The world of cryptocurrency trade is becoming more popular and competitive, and many investors want to maximize profits, at the same time minimizing their losses. A key strategy that can help you achieve this balance is the implementation of the reward relationship in your store. In this article, we will explore how to do this, providing a detailed guide on how to calculate, administer and optimize the risk rewards relationship.
What is the proportion of risk reward?
The risk and reward relationship is the percentage of a possible reward you expect to receive for each risk unit. This is a measure of how many earnings you can expect from a store or investment in relation to the amount of money in the cube. A good reward relationship indicates that your yields are proportional to your losses and do not exaggerate with you.
Why implement the risk and reward relationship?
The implementation of the reward of the risk of key importance in the cryptocurrency store for several reasons:
- Risk management : By establishing a clear risk reward relationship, you can manage market volatility exposure and minimize potential losses.
- Diversification : A well -implemented risk reward relationship can help you diversify your portfolio assigning your capital different classes or property strategies.
- Greater trust : When you have a solid relationship of risk rewards, you will feel safer in your commercial decisions and it is less likely to bring impulsive bets.
Calculation of the relationship to a reward
To calculate the risk and reward relationship, follow these steps:
- Determine your maximum risk performance : Calculate the percentage of the potential loss you are willing to accept before deciding to close the store.
- Set the expected gain
: Determine what benefit you expect from each store or investment.
- Calculate the risk : Use the following formula to calculate your risk:
Risk = (maximum loss / maximum gain) \* 100
For example, if you quote a cryptographic currency with a maximum loss of $ 10,000 and an expected 20%gain, the risk would be calculated as follows:
Risk = (10,000 USD / 0.2) \* 100 = 5,000,000%
- Determine your reward : Calculate your reward based on the expected gain.
Prize = Expected Gain \* (1 – Risk)
For example, if you quote a cryptographic currency with an expected 20% gain and a 10% risk, the reward would be:
Reward = 0.2 \* 100 = 20%
- Create a risk and rewards relationship : Combine your calculated risk, reward, maximum loss and expected gain to create your risk and reward relationship.
Risk reward ratio = (maximum loss / maximum gain) \* (1 – risk)
For example:
Risk reward ratio = (10,000 USD / 0.2) \* (1 – 5000,000%) = 20%
Risk Rewards Management
To maximize the risk and reward relationship, consider the following strategies:
- On dollar arrival average : Invest a fixed amount of money at regular intervals to reduce the impact of market volatility.
- Position size : increase or reduce the size of your position depending on risk relationships and rewards to ensure that you are not exaggerating it.
- Detention orders
: Establish the loss stops to limit their potential losses if the store does not work as expected.
- Coverage : Use protection strategies to reduce exposure to market volatility or protect from unexpected losses.
OPTIMIZATION OF THE RISK RELATIONSHIPS
To optimize the risk and reward relationship, consider the following factors:
- Market terms : Adjust the risk and rewards ratio in response to variable market conditions.
- Strategy efficiency : Analyze the work of different strategies and adjust the proportions of your risk and rewards accordingly.
- Capital distribution : District its capital between the class or strategy of different assets based on a relationship of its reward.
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