Risk vs Reward | Forex Factory

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Risk vs Reward

  • #1
  • First Post: Jul 9, 2011 12:03pm Jul 9, 2011 12:03pm
In forex everyone is investing his money at a predetermined risk for a reward that is doubtful.
High risk trading is becoming popular due to "fast money concept" in trading. In my opinion a reasonable risk should be used by beginner traders. Professional can use any risk depending on their experience and style. But beginners should use it wisely. Risking too much for "high reward" dream is often disastrous. I have seen many traders asking the reason of "why they lost" or "why 0 in few days" in forex.

Lack of knowledge about risk vs reward is one of big reasons of their loosing.
  • #2
  • Jul 9, 2011 4:53pm Jul 9, 2011 4:53pm
So glad you opened a new thread to share those life-saving words of yours

Good results on your trading, well done!
Measure twice, cut once
  • #3
  • Jul 10, 2011 7:23pm Jul 10, 2011 7:23pm
Quoting expertreview
In forex everyone is investing his money at a predetermined risk for a reward that is doubtful.
High risk trading is becoming popular due to "fast money concept" in trading. In my opinion a reasonable risk should be used by beginner traders. Professional can use any risk depending on their experience and style. But beginners should use it wisely. Risking too much for "high reward" dream is often disastrous. I have seen many traders asking the reason of "why they lost" or "why 0 in few days" in forex.

Lack of knowledge about risk vs...
The way you say it leaves the average trader with lack of knowledge.. they read this and go "oh so if I simply stop going for 1:1 and do 1:3 then I'll win more than I lose..."

but its not true for poor newbie... same scenarios with 1:1 and 1:3 just mean the same results...

I know that's likely what your touching on... but its funny how it simply opens the revolving door
  • #4
  • Jul 11, 2011 3:49am Jul 11, 2011 3:49am
Quote
In forex everyone is investing his money at a predetermined risk for a reward that is doubtful.

Due to doubtful reward Forex this the tool only for RISK capital.
  • #5
  • Jul 11, 2011 5:58am Jul 11, 2011 5:58am
Quoting josef
Due to doubtful reward Forex this the tool only for RISK capital.
any investment is only for risk capital. Even bonds, you still have the risk of the issuer defaulting.
  • #6
  • Jul 11, 2011 7:30am Jul 11, 2011 7:30am
Quoting Custos
any investment is only for risk capital. Even bonds, you still have the risk of the issuer defaulting.
Ok, Forex is capital you can burn in your garden and everything will be fine?!
  • #7
  • Jul 11, 2011 7:35am Jul 11, 2011 7:35am
Quoting josef
Ok, Forex is capital you can burn in your garden and everything will be fine?!
don't know what that statement should mean. Maybe get your facts together.

There is always risk in any investment. Buy real estate, you have risk to lose money on it. Buy stocks, you have risk to lose money on it. Buy futures, options, cfd's or other financial products and you have risk of losing money. Buy wine, art, old-timers and also there you have risk of losing money.

Maybe you should make more constructive comments than just random statements.
  • #8
  • Jul 11, 2011 4:57pm Jul 11, 2011 4:57pm
Quoting Custos
There is always risk in any investment. Buy real estate, you have risk to lose money on it. Buy stocks, you have risk to lose money on it. Buy futures, options, cfd's or other financial products and you have risk of losing money. Buy wine, art, old-timers and also there you have risk of losing money.
Technically, that is true, but you also have to look at probability. If you do your due diligence on the purchase of real estate, the chances of losing money, while still there, is very low. Do your proper research on stocks (and underlying options), and the chances of losing money on the trade lowers dramatically. Learn the charts and it becomes easier to predict the direction of the stock/currency pair (even if only in the short term) and that lessens the chance of a losing trade. That is how you become succesful in the markets; by using all the info available to you to make the most informed decision, thus lowering the chances of being wrong.

After all, there is a risk of falling down a flight of stairs and becoming paralyzed....but the probability of falling down a fligh of stairs is actually pretty low, as people use the stairs millions of times a day with no mishaps.

My two pips worth...
  • #9
  • Jul 11, 2011 5:35pm Jul 11, 2011 5:35pm
Quoting expertreview
In forex everyone is investing his money at a predetermined risk for a reward that is doubtful.
Seems oddly like for example opening one's own business
  • #10
  • Last Post: Jul 11, 2011 11:44pm Jul 11, 2011 11:44pm
Quoting moneymaker2
Technically, that is true, but you also have to look at probability. If you do your due diligence on the purchase of real estate, the chances of losing money, while still there, is very low. Do your proper research on stocks (and underlying options), and the chances of losing money on the trade lowers dramatically. Learn the charts and it becomes easier to predict the direction of the stock/currency pair (even if only in the short term) and that lessens the chance of a losing trade. That is how you become succesful in the markets; by using all the...
Of course, totally agree with your post. I just wanted to make the point that not only in forex you can lose money, as josef seemed to imply.
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