Greeting all,
I have a question concerning the risk reward ratio for carry trades. In my normal forex trades I try to use risk reward ratio of at least 1:1 in terms of pips. My question is should I do this for my carry trades also? For example, would it be wise to risk $1000 to gain $700 in interest in a year’s time. My stop loss would be set to a place where I would lose $1000 if my carry trade is stopped out. Is it wise to even use a stop loss in carry trades?
Also it seems that the potential for my profit could be much greater if I held the trade for longer, say two or even three years. This would affect my risk reward ratio.
I have a question concerning the risk reward ratio for carry trades. In my normal forex trades I try to use risk reward ratio of at least 1:1 in terms of pips. My question is should I do this for my carry trades also? For example, would it be wise to risk $1000 to gain $700 in interest in a year’s time. My stop loss would be set to a place where I would lose $1000 if my carry trade is stopped out. Is it wise to even use a stop loss in carry trades?
Also it seems that the potential for my profit could be much greater if I held the trade for longer, say two or even three years. This would affect my risk reward ratio.