WHY YOU SHOULD TAKE PROFITS OF 20-25 AND CUT LOSSES BY 7-8%

To make money in the market is to protect the money you have. And these are the first 2 rules that will give you a reward/risk ratio of approximately 3:1, with a 20-25% profit take versus a 7-8% loss range.

If you follow this selling rule, you can be wrong on 2 out of 3 trades without any serious problems (maybe just a small loss).

Example: Use a 3:1 Reward/Risk Ratio to protect and grow your portfolio

1️⃣ Investment amount #1: 5000 USD, but you lost 7%, your loss is now 350 USD, your total assets remaining in the first transaction is 4,650 USD

2️⃣ Investment amount #2: 4,650 USD, you continue to lose 7%, the loss is now 326 USD, your total remaining assets are now 4,324 USD.

3️⃣ Investment amount #3: 4,324 USD, but this time you profit 25%, the profit is now 1,081 USD, your total assets are now 5,405 USD

After 3 transactions, summarizing your assets, you gain 8%.

Anyone makes mistakes and accepts losses. But if you always cut your losses early, you will never make serious mistakes.

And one more case: Suppose if your winning trading rate is 60% (3 profitable transactions and 2 losing transactions), what will be the result?

1️⃣ Investment amount #1: 5000 USD, but you lost -7%, your loss amount is now - 350 USD, your total assets remaining in the first transaction is 4,650 USD.

2️⃣ Investment amount #2: 4,650 USD, You profit +25%, the profit is now 1,163 USD, your total remaining assets are now 5,813 USD.