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Trading training

The Company Dividendcare Limited prepared 10 lessons for traders (both for beginners and for practicing); each of these lessons is dedicated to one topic. They give an idea of what trading on Forex is and how you can gain from it. These lessons allow to orientate better in how trades on forex go, asses correlation of risks and benefits and ultimately to take reasonable trading decisions. Below you can see a summary of the lessons.

Movements on the exchange market: basic concepts

Trades in the Forex market are held in the mode of continuous changes in asset quotes - currency pairs. This dynamics is determined by the ratio of demand and supply. Why does the supply-demand correlation change, which determines the course of trading on Forex? Because there are many influencing factors: events in politics and economy, publication of statistical data and forecasts, actions of key financial regulators and others.

Basic terms
  • "pips" is the smallest step in the price movement;
  • "lot" is the minimum amount of the opened position;
  • "leverage" is a loan from a broker that allows you to trade on "Forex" with a relatively small amount of own funds.
How to place an order?

Order is an order to open (close) a position that a trader sends to his broker. If, for example, in the course of bidding on Forex, a rate is made on the growth of an asset, then a long position opens, otherwise it is a short one (for selling euros). The position is closed in the opposite direction to the opening. There are different types of orders - market, limited, stop.

Technical analysis: how to understand graphics?

Technical analysis is the study of the dynamics of quotes in order to determine market trends and the adoption on this basis of justified decisions on the opening (closing) of positions. When trading on Forex, a trader can notice in a graphical form a continuous change in quotes. There are several types of diagrams: linear, bars (columnar) and Japanese candles, which are built at different time periods (timeframes).

Support and resistance levels. The concept of moving average indicator

Support and resistance are important levels, near which the price movement may pause (temporarily or reverse in the opposite direction). Support is an obstacle for the movement of quotes down, resistance is for a movement up. These levels are used in Forex trading to open (close) positions. In technical analysis, moving averages are popular, which are formed through averaging the price for a certain period. In order to determine market trends and for the purpose of forecasting, the current price is compared to the moving average.

Trends and trend lines

Trend is the direction of price movement, which happens to be ascending (growing), descending (falling) and lateral (flat). Trends can be determined using trend lines. For a forex trader, the knowledge of the trend, the position of the current exchange rate relative to the trend lines, as well as the breakdown of these lines and the further movement of the asset price are important.

Trend indicators

Trend indicators are instruments of technical analysis that are used in trading on Forex and show the supposed direction of price movement. The most popular of the trend indicators are:

  • ADX (average directivity index);
  • MACD (convergence and divergence of the moving average);
  • Momentum (technical indicator of the tempo);
  • Linear Regression (linear regression).

Индикаторы-указатели тренда — это инструменты теханализа, которые используются в торговле на «Форексе» и показывают предположительное направление ценового движения. Самые популярные из указателей тренда:

  • Stochastic;
  • RSI (Relative Strength Index);
  • CCI (Commodity Channel Index);
  • Fractals (fractals);
  • Alligator indicator.
Trading psychology

УсSuccessful trading on Forex is not only the possession of analysis and forecasting instruments, but also control of emotions that, of course, embrace any trader. The two main feelings that accompany trading are greed and fear. It is impossible to get rid of emotions in trading, but it is quite possible to control them.

Capital management

One of the components of success in trading on Forex is the competent management of capital. Managing capital, a trader must take into account the correlation of profits and risks. It can be calculated as the difference between the potential profit and the costs incurred for making a profit. When you learn to properly manage capital, you will notice an improvement in the results of your trading.

Lessons list

  • Lesson 1 – Basic concepts - Movements in the foreign exchange market.

    Henceforward, you are a member of the global society of financial markets! On the platform Dividendcare Limited it is possible to carry out operations of buying and selling currencies, just as an investor buys shares. Now the future of the global financial markets depends on you!

    Demand and supply. In order to determine which way the economy of a particular country will move in the nearest future, traders resort to all kinds of economic indicators and data, such as gross domestic product (GDP), import and export volumes, employment level, unemployment rate, growth rate, debt volume, and many other factors. All this together is called «fundamentals».

    The currency value depends on any changes in the demand and supply in the market. For example, when there is a large demand for dollars in the world, the dollar rises in value. In the event that there is an excess in the supply of dollars on the market, or for some reason they are not in great need, the dollar depreciates in price.

    Currency pairs price

    Trading in global currency pairs represents a correlation of increase or depreciation of the price of one currency against another. Each world currency has a 3-letter abbreviation, where the first currency of any pair is known as the base currency. At any moment, the price shows the value of the base currency, expressed in units of the second – the key currency (leading currency). For example, when the price of EUR/USD pair is 1.4000, it means that you can exchange 1.4 dollar for 1 euro. In case the euro rises in price, the price of the EUR/USD pair also increases, as there is a demand for US dollars to buy the euro. The same happens with the euro: when the euro depreciates, the EUR/USD pair also falls in value, because there is less demand for US dollars to buy euro.

    The cost of a key currency is not the only factor in the price formation of a particular currency pair. Any change in the value of the base currency, of course, also affects this interrelation. Using the same example, if the US dollar is currently rising in price, then the EUR/USD pair will depreciate in price, and therefore the demand for dollars is not so great for buying euro. Consequently, if the dollar depreciates, then the EUR/USD pair price will increase, as the world has fixed a great demand for US dollars to buy euro.

    Besides that, the increase or decrease in the value of each currency pair directly depends on the value of its key currency. In addition, the increase or decrease of the price of the same currency pair is correlated with the leap in price of its base currency in inverse correlation.

    In such a manner, if a trader forecasts the growth of the US economy, and the value of the dollar subsequent to it, then it is likely that he will sell the EUR/USD pair, since in this scenario it will depreciate in price. In case if, according to the trader, there will be an increase in the EU economy and, subsequently, the price of the euro, it will be in his interest to buy the pair EUR/USD.

    Interest rates

    Another important factor that influences the formation of the currency price is the interest rate that the central bank of a particular country sets, as a penalty for the use of its money. Interest rates constantly change, so it is necessary to monitor their changes constantly

    For example, if the US Federal Reserve System (commonly known as the FRS) decreases the interest rate, then, as a rule, the value of the US dollar will depreciate, resulting in a price increase for the EUR/USD pair. If the FRS raises rates, then the US dollar, as a rule, rises in price, and the value of the EUR/USD pair depreciates.

    If the European Central Bank (ECB), an analogue of the FRS in the European Union, decides to increase the interest rate, then, as a rule, the euro rises in price, and the EUR/USD pair will become cheaper. If the ECB decreases interest rates, the euro will depreciate in price, while the EUR/USD pair will also decrease in value.

    Central banks always balance, adjusting to the changes in the market. If the country's currency becomes more expensive, consequently, its export also becomes more expensive, and the problem of importers' refusal in favor of more affordable options may appear. In addition, there are cases when the decrease of interest rates is aimed at stimulating the economy, but if the rates are too low, inflation may become the next sequence of events. In this case, in order to slow the growth it will be necessary to raise rates again.

    Higher interest rates tend to attract more foreign investment (that is exactly why the growth of a country's currency in most cases depends on interest rates). At the same time, low interest rates stimulate the process of lending within the country and, consequently, economic growth.

  • Lesson 2 – Basic terms.

    To keep up with the main trends in the global financial markets and be able to conduct profitable trading in the market, you need to know certain terms and concepts. Here are a few basic terms in trading.


    On the stock exchange and the futures market, they are often called a tick or item. This is the smallest unit in trading. Pip is the extreme right-hand digit in the price offer.

    Lots and leverage

    Trading currencies are expressed in lots. The price of the full lot is 100 thousand units. Of a certain currency, a mini lot is 10 thousand units. The average trader cannot always afford to operate with such big amounts. That is exactly why brokers of Dividendcare Limited offer services of leverage, so that even a trader with an average balance on the account could afford to trade in the market.

  • Lesson 3 – How to place an order?

    This lesson focuses on how to place an order or to conclude a transaction at a specified price. Before we proceed to consider this issue, it is necessary to define certain terms. Bid is the price that a trader can pay, Ask is the price for which a trader is ready to sell, the difference between them is called Spread.

    If you think that the price will rise, you should take a long position. Otherwise, you'd better sell the currency and take a short position. Thus, your goal should be to cover certain positions in order to buy back the currency at a lower price.

    Order types

    The most popular, main order type is a market order. This type of order is better to place at the moment when you want to take a position. If the movement in the market is too fast, there is a serious chance that you will receive your order at a different price. Thus, the difference between the actual price and the price on which you counted is called slippage. (slippage).

    There are four types of pending orders:

    • A limit buy order (Buy Limit) is placed when you believe that the price will rise after depreciation to a certain level. You can place a limit buy order when the requested price is equal to the pending order.
    • A stop buy order (Buy Stop) will help you in a situation where, in your opinion, the price will rise after rising to a certain level. This order is placed at Ask price.
    • A limit sell order (Sell Limit) takes place if you think that the price will depreciate after reaching a certain level. As a rule, the order will be activated when the Bid price reaches the pending order.
    • A Stop sell order (Sell Stop) is useful if, in your opinion, the price depreciates below a certain level. This order is placed at the Bid price.

    There are other types of pending orders. Most traders use a stop-loss order (Stop Loss). Most commonly traders use a stop-loss order (Stop Loss). It is necessary to automatically close your positions and stop the loss process, in case the price starts moving in an undesirable direction.

    For example, if you took a long position, you probably place a stop-loss below the entrance. This step will protect you from a sudden price depreciation. In case you are in a short position, the stop-loss will be placed above the entrance.

    Trailing stop makes the system more flexible. If the price moves in your favor, the stop loss follows the price.

    Another common type of pending order is Take Profit. This order automatically closes the position as soon as the desired price is reached. This type of order protects a trader from unpredictable movements in the market. At a long position, the take-profit should be located higher than the current price, and at the short position, it should be lower than the current price.

  • Lesson 4 – Technical analysis: how to understand charts

    In order to understand the mechanism of the market functioning, imagine the market in the form of a battle between two opponents: those who raise the price (bulls) and those who want to reduce the price (bears). This battle shows how the market moves.

    Interpretation of the price movement graphs is called technical analysis. This complex and fascinating occupation helps the trader predict the price movement.

    There are three types of price charts that are used in technical analysis:

    • 1. Line Chart is the most simple chart type. Such a chart shows the value of the closing price at any time. However, the line chart does not show the opening price or changes on the market.
    • 2. Bar Chart (Bar Chart), where the vertical bar shows the maximum and minimum price, the horizontal bar on the right shows the closing price, and on the left - the opening price. Judging by the size of the bar, you can consider what a fight was between bulls and bears.
    • 3. The candlestick bar chart is often used in technical analysis. It was used in the 12th century in Japan to predict the prices of rice. Such a price chart is highly accurate and explains the situation on the market: who has strong positions, who wins. The plumes of the candles show the highest and lowest prices during the period. The situation when the opening price and the closing price are at the same level, and the candle body disappears itself, is called the doji.
    • Timeframes

      A candle means a certain timeframe, that is, a period of time. Periods have the property to vary from a minute to 1 month. In order to understand better how the market works, you should choose a certain time frame according to the manner of your trade. For example, if you use scalping, you will most likely choose a short timeframe, in case you are in a long position, you will use the longest terms.

      You could understand better where the prices will go up or down and trace their further direction, using a long timeframe. Therefore, you will have a choice: will you be with those who raise prices or with those who want to reduce the price. In the case of short timeframes, you can change the strategy chosen by you, watching the movements in the market. If you are with those who raise prices, or, to put it metaphorically "with bulls," you will wait for long signals in order to buy. If you are the one who wants to reduce prices, you should take a short position.

  • Lesson 5 – Levels of support and resistance. The concept of moving average

    If you see that the price is rising, you can positively talk about what people buy. At some point the bulls will fix their profits. Meanwhile, bears will look for an opportunity to take a short position. At a time when sellers prevail over buyers, a resistance level is formed.

    In the same way it happens when the price depreciates, which is a sign that the number of sellers exceeds the buyers. At some point, sellers decide to cover their short positions and fix profits. At the same time, bulls will continue to be interested in buying. The lower the price, the more bulls want to take long positions. In this case, when buyers prevail over sellers, a level of support is formed.

    As we mentioned in the previous lesson, traders often use pending orders. Such orders have a strong influence on the market, because they can act both as a support level and as a resistance level, until they fall below the level

    There are many different levels of support and resistance, so a trader needs to learn them as more as possible. If the price reaches this level, then it either depreciates below, or starts to rise above the level.

    In order to determine the price change, it would be good to draw horizontal lines at key levels.

    The concept of moving averages is of utmost importance.

    A trader needs to familiarize himself with the concept of the moving average, because the term is often used in technical analysis. This indicator shows the average price for several periods. Moving averages are divided into several types, for example, the average closing price indicator.

    Moving averages can be used in many ways. As a rule, traders, trying to determine their future actions, whether they should buy or sell, compare the current price with its moving average. When the price reaches the moving average, the trader needs to decide which direction the price will move: up or down. In a situation where the price is far from the moving average, there is a possibility that you will risk your trading, because, ultimately, the price will return to the average.

  • Lesson 6 – Trends and trend lines
    Lesson 6 – Trends and trend lines

    We will continue studying the key concepts and aspects of technical analysis. This lesson covers one of the most important concepts – trends.

    Trends are of three types: the price rises (uptrend), the price depreciates (downtrend), and the sideways trend.

    Each trend has the highest and lowest rates. For example, an uptrend is characterized by high maximums and high minimums. At the same time, the downward trend is characterized by low maximums and low minimums. In case of a sideways, the price will not change.

    Trend lines are important elements that show the main trends on the chart.

    Trends can be determined by drawing trend lines. The trend lines connect the maximum values of the support level and the minimum values of the resistance level. If you are interested in the direction of movement of the resistance level, you need to connect the maximum values in one line. When you are interested in the level of support, use the connection of the minimums. In a period when the price fluctuates between two levels, we can continue trading within this range. In this case, the trend lines themselves become additional levels of support and resistance.

    In case the price goes beyond the support or resistance level, the best option for the trader will be to choose the direction in which the price moves. However, most of these price movements are false, so the trader must be careful.

    There are several ways to determine false out-of-levels

    If you notice that the price depreciates below the support level, probably it will go in the same direction again, but this time it will act as a resistance. As practice shows, the most successful deals were concluded in a short position, but, as a rule, during the second price movement, which serves as a second check, and not during the first one.

    System of trend lines

    ЭThis is the most simple trading system that uses trend lines. If this is an uptrend, we connect the minimums in one line. If the price goes beyond the uptrend and then depreciates, this is a sign that you can take a short position.

    If we take a downtrend, minimums will join in a line. As soon as the price goes up, and you take a short position, you are recommended to get out of it. If you did not start trading, it would be more profitable for you to take a long position.

  • Lesson 7 – Indicator – Trends indicators

    You already know that there is a wide variety of trading instruments that you can use to trade efficiently and profitably. For a proper understanding of the price charts and forecasting a future direction of the price, you need to be able to use indicators – technical analysis instruments that help analyze the price. There are two groups of indicators: trend-followers and oscillators.

    Trends indicators show in which direction the price will move. Oscillators may be applicable when the price fluctuates in a certain range. It is extremely important to be able to understand which indicator you should use within a given situation.

    The most popular trend-followers are:

    The Average Directional Index (ADX) is a trend indicator that will help you understand what is more rational to use as a whole: a trend indicator or an oscillator. It is considered that trend indicators work better when ADX is above level 30, and if ADX is below 30, it is better to use an oscillator.

    The growth of ADX means appreciation of a trend and its depreciation alarms about its weakness and that a trading range can increase. It is import to notice that ADX doesn’t show a direction of a trend, but only his strength.

    Moving Average Convergence Divergence (MACD)  (MACD — Moving Average Convergence Divergence) – is an index that shows the difference between the long-term and short-term moving averages. If the red line goes above the blue line, it is a characteristic of an uptrend, and if the red line goes below the blue line— it is a downtrend.

    In addition to the red and blue lines, there is a green line, which indicates the trend strength.

    Let’s consider the following example. When the red line is below the blue one, the price starts to depreciate. When there is a downtrend, the green line starts to rise. When the price changes for an instant its direction to go up, the bar chart shows the trend weaknesses. The trend will lose its strength until the next long red candles appears on the chart. It is important to pay attention to the fact that if the price has fallen to a minimum, the oscillator on the chart will not reach the same low level. This situation is called  a bullish divergence (bullish divergence), meaning that the trend will end soon.
    The technical indicator of the tempo (Momentum)  (Momentum) – is another indicator that determines the rate of change in closing prices. It works in the same way as the MACD chart. Traders usually use it to assess the reversal point, since this indicator is able to determine the weakening of the trend.

    Here is an example of how a technical indicator of a tempo works. If the indicator is below zero, and then it suddenly increases after a bullish divergence, this may indicate a long position. If the indicator is above zero and then falls down, this may be a sign of a potential short position.

    Linear Regression  (Linear Regression) – эis an indicator that is sensitive to changes in prices. Sometimes, a quick countertrend can be made if the price makes an unexpected step to the other side of its linear regression line, and then returns to the regular value with the same linear regression line.  

  • Lesson 8 – Indicators – Oscillators.

    The oscillator values fluctuate within a certain range. They show the maximum value of the price and the moment of its reversaL.

    Stochastics  (Stochastics) — is an oscillator that ranges from 0 to 100. If the indicator exceeds the level 80, then there is a situation of excessive buying (overbought), and in the event that the stochastic is less than 20, we see a situation of oversold sales. When the red line passes above the blue line, we can believe that the bulls defeat the bears. If the red line passes below the blue, the battle is in favor of the bears.

    When the stochastic is above level 20 after it turns from the position of excessive buying, it is usually recommended to take long positions. If the stochastic is at level 80, this is a sign that, most likely, the trade will close. In such a situation, it is wiser not to enter into trade. In case you observe chaotic movements of the stochastic, you should close all long positions.

    If the indicator approaches level 80 again, it would be more profitable for a trader to take a short position. However, if you notice that the stochastic is closer to level 20 than to 80, this means that you should think well before taking a short position. Once they cross, it's time to close all short positions. Immediately after that, check the value of the indicator, if it is above 20, it means that the cycle is repeated again and again, and it is not superfluous to consider the option to take a long position

    The RSI  (RSI — the Relative Strength Index) The RSI (Relative Strength Index) has similar functions to the stochastic. Both indicators are used to refer to situations of excessive buying and oversold. If the indicator is 30, then it shows the situation of excessive sale, and above 70 – – the excess purchase.

    ПIf the RSI index shows a value above 30, it will be better to take a long position. In the case where the indicator falls below 70, the short position will be a better option. It is also important to pay attention to the fact that if the level exceeds 50, this indicates an uptrend, and below 50 — – a downtrend.

    The Commodity Channel Index  (CCI – Commodity Channel Index) – is another variation of the oscillator. In the scale of this indicator, zero is in the middle, and the value of the indicator can range from -300 to +300. A level above  +200 indicates a situation of excessive buying, and the level below this number – is an oversold.

    If the CCI indicator falls below  -200, the trader should take a long position. Accordingly, if the indicator above +200 – he should take a short position. In a situation where CCI is next to 0, and then suddenly starts to grow up, and not down, this is a good chance to take a long position. Similarly, if the indicator goes to 0 from the minus values, and then bounces back down to minus, the short position will be more acceptable.

    Fractals (Fractals) – are markers that emphasize candles with maximum values. Usually a sign of fractals may be the situation when a new candle with a high maximum appears in the chart, surrounded by two low highs. Also, we can judge about fractals on a new candle with a low minimum, surrounded by two high lows. Fractals show where the reversal points of the price will be. This indicator is usually used with the alligator indicator.

    Alligator  (Alligator indicator) – эis an indicator that has its name because of the similarity with the teeth of an alligator. When the alligator «"opens his mouth"», this is a sign that a new trend is beginning, and we follow this trend until we begin to notice that the alligator is going to «"shut the mouth."».

  • Lesson 9 - Trading Psychology

    Knowledge of financial instruments and indicators is undoubtedly of great importance, but a trader will not succeed without the awareness and control of his own emotions that have a strong influence on the trading process. Investors who guide by emotions drive the markets. Most likely, you have repeatedly heard phrases that the price of oil or gold is decreasing against background of fears of investors. Ultimately, it is important to learn to understand what is behind the movements in the market, and thus, to learn to control their own emotions.

    Greed  – is a feeling that affects the behavior of a trader, and his actions. The rise of prices attracts close attention to the trend. More and more people are trying to determine the trend. While their attention is focused on market movements, they completely forget about the balance of funds on the trading account. They start thinking about their potential profit as a real income, as something they already have.

    There is also another factor, which is often called « the "theory of a big fool" ». Its meaning is that someone buys at a high price from a seller who believes (and not without reason) that the trend will lose its force soon. The trader hopes that there will be someone who will buy after him, even at a higher price, as soon as he decides to become a seller.

    Fear – is an emotion that, as a rule, prevails in the market. Every day traders, investors, embrace panic as soon as prices begin to fall. Fear is one of the basic human emotions, and this explains why rising prices are slower than falling. Traders who occupy long positions want to sell faster, and those who are in the short position, motivated by prices falling, add orders. When short positions are covered, the price begins to grow gradually, giving false hope to traders.

    Practice is necessary to learn to control emotions. When you learn to understand and see the movements in the market, relying on logical deductions, you will be able to profit in conditions of an unstable situation in the market.

    Pay attention to how emotions drive the market

    Level of support and resistance characterize the market best of all. In the case when the level of resistance is directed downward, it means that the position of those who raise the price is stronger than those who are interested in the lower price. If the resistance level goes up, we can determine that the bears defeat the bulls. Similarly, if the level of support does not change, we can expect that any price depreciation will trigger. « a "take-profit" reaction».

    Another indicator is the index of technical growth (momentum). Pessimism is reflected in the chart in the form of successive periods of decrease in the growth rate of the market. Both types of indicators (trend indicators and oscillators) can show how the trend will change its direction.

    Another factor that gives an idea of the movements in the market is the volume of exchange trades. If the volume of exchange trades suddenly falls, this is a clear signal that the trend may change or, at least, you need to be prepared for turbulence in the market.

    Keep your emotions under control

    To become a successful trader, you must learn to be disciplined and control your emotions. This is easy to do if you can listen to yourself and learn to determine your emotions in specific situations.

    When emotions are changeable, and they influence decision-making, we advise you to analyze your strategy and, more importantly, your line of conduct. Often, emotions have a stronger impact on your actions during trading than a pre-prepared plan.

    Exemplary situations will help you determine whether emotions drive you during trading. Carefully read, maybe you will find yourself in these examples.

    1. Fear – is a situation when you left the position to make sure that you were right about the direction of the trend;
    2. Greed  – is a situation when you stayed in position for too long, not paying attention to signs of a decline in the trend;
    3. Fear – is a situation when you left the position with losses, only to return later, when the trend will constantly grow;
    4. Greed  –is a situation when you are in a position and bear big losses, hoping that the trend will change its direction in your favor (which is unlikely);
    5. Fear – is a situation when you go into the trend too late, just because you were not sure about its direction and were afraid of incurring losses;
    6. Greed  – is a situation where you enter the trend too early, even without knowing the direction of the market.

    If you find yourself in one of the above situations, you need to review carefully your strategy. It is recommended before assuming any position, to pre-establish goals and objectives and follow-up and follow them. As soon as fear, panic or excitement takes you above, you lose the ability to think critically, as a result of which you are losing.

  • Lesson 10 – Money Management

    We have learned different types of indicators, market mechanisms and trading psychology. Now it is time to talk about the keystone – – money. Proper capital management – is the key to success in the foreign exchange market. In general, profit depends on 50% of the quality of money management, 40% on psychology, 8% on outputs at the right time, and only 2% on entrances.

    Effective trading system

    An effective trading system consists of the following factors:

    • Criteria for concluding a deal
    • Indicators that confirm signals for input
    • Criteria for exit from transactions (or stay in them)
    • Rules for setting stops
    • Rules for setting targets
    • Method for determining risk positions
    • A way to understand and evaluate transactions 

    Fundamentals of Capital Management

    The main rule when opening a position– is not to take risks, putting more than 2% of the balance on your account for one position. This works in the worst case, when the stop-loss was activated. You can easily calculate the potential risk by knowing the balance on your account.

    If your trading strategy requires the use of large stops, you can also use smaller stops. In addition, if you think that you could trade with large amounts of funds, you can use smaller stops and smaller timeframes.

    It is much more rational to receive small but constant incomes than to tear down big bucks along with regular large losses that beat your funds on your trading account. As a rule, novice traders are too active trading for amounts that are close to the digit denoting the balance on their account. It is important to note that it is difficult to hold large positions, especially if the market is not moving in your favor.

    When opening positions, we strongly recommend that you do not risk more than 6% of the balance of your trading account.

    The risk-to-reward ratio  (Risk-to-reward ratio) –is a factor that each trader must take into account when managing capital. You can calculate this ratio by calculating the difference between the potential profit and the amount set to get that profit. The 1: 1 ratio is too risky, and it is best to avoid it. You can go for a minimum ratio of 1: 2. Once you get the experience of making deals with ratios of 1: 3, 1: 5 or higher, you will see an increase in your profits. When you learn to manage capital correctly in combination with calculating the ratio of profit to risk, you will notice a significant improvement in your trading system.