The majority of the new traders are trading with big risks even though they don’t have enough knowledge to trade this market. Spread betting is extremely risky and when you trade with a big lot size, you are squandering the potential profit factors in trading. When people started trading, they begin to invest their money in a volatile market without knowing the nature it.

Though trading is one of the most profitable businesses, the majority of traders are losing money in trading. You should think of making your profit but you should not forget how to take the least amount of risks whilst securing the maximum return. This is where the risks to reward ratio comes in. This is also called the “3Rs” and you will find that all of the traders in the UK are using these 3Rs to place their trades in this volatile market.

When you are in Forex; you should know that it is not possible for to survive in this industry without following high-risk-reward trade setups. This is important for your career and it will also help you to make the profit without losing all your investment. This article will give you a basic idea of risk and reward ratios and will also tell you how you can set your risks and reward ratios in your trading.

Before you search for the best UK spread betting broker, you need to do some research about the trading industry. According to recent statistics, more than 90% of the traders are still losing money. So are you comfortable enough to step into the world of trading where you have a very small chance of becoming successful? If the answer is yes, you are on the right track. Trading is not hard once you learn all the basic details of the market. Many novice traders in the United Kingdom are making tons of money by trading with the reputed brokers like ETX Capital. They have worked hard and managed to develop a balanced trading system to trade this market.

Risks to Reward ratio

This is the ratio that says how much risk you should take in each trade. We know this is a volatile market and the prices can change, so it’s imperative that you trade with the best UK spread betting broker so that you can experience the best possible trading environment. Once you have the right trading environment, with the help of high-risk-reward trade setup, you will be able to make a decent profit every month. Learn more about trade management since it’s crucial to your long-term success. If possible, seek help from expert traders in the United Kingdom to get a clear idea about true nature of this market.

How to set this risk to reward ratio?

You should know that you cannot take risks of more than half your potential profit. If you are looking for £100 in profit, you cannot take risks more than £50. This is how this ratio works. If we give you an example of everyday trading, you will get the idea of setting the risks. If you take risks of £2 trying to make only £1 in profit, what will happen after losing two consecutive trades? You will lose £4 and it will take 4 successful trades to balance that loss.

If you have your risk to reward ratio, you will only take £1 of risks for making a profit of £4, you can easily cover up 4 consecutive losing trades with a single winner. This is the true beauty of high-risk reward trade setup. As a fulltime trader you should always trade the higher time frame since it’s much easier to find high-risk-reward trade setups in favor of the long-term trend. If possible, use the price action confirmation signal to place your trade.