To start a new journey, you should think about both the risk vs reward in trading. This is true for trading as well as for life. You have to think about whether the risks of losing are worth the chance of getting something in return. When you start trading, your risk is made up of your position size and your stop loss. As long as you hit your profit target or let it run with a trailing stop, you will get your best reward. However, the bigger picture is how much money, time, and mental energy you risk by putting your time, money, and mental energy into trading instead of other things. As long as you put in the work and make a trading system that has an advantage, you have the chance to change your financial life. If you start trading without knowing how hard it is and that you will lose, you are setting yourself up for a lesson in the markets.
A lot of these could happen in the long run:
People who make money
- Learning how to do something for the first time
- Making yourself a better person
- When you make money, it grows.
- Having more confidence
- Learning about and dealing with your flaws
- Getting more free time with your money
- Getting rid of debt
- Having enough money to live on one’s own
- Become rich.
- People can get hurt if they don’t pay attention to the risks.
People who loose money
- Trading before Learning how to do it .
- Bring out the worst in yourself when stressed.
- Adding to your losses by trading too big with no chance of making money.
- After going on a losing streak and losing all of your money.
- I found out that I was not meant to be a trader.
- Trading for money only to lose it.
- Use credit cards to fund your account, then lose it or have your margin call when you trade too big.
- Going broke by taking on too much risk or trying to trade full time and not having enough money.
- When you don’t pay attention to the risk of going broke.
Utilizing Risk vs Reward in Trading
Trades can both make and break your trading account, depending on how you look at the process.
The first risk you need to do to be a good trading is to make sure you’re properly sizing your positions and setting your stop losses. You can lose a lot of money and make it hard to get back even if you have a big drop in your bank account. This can also make it hard to keep going.
There are three things you need to do well in trading: learn about the basics, build your own system, and keep going for a long time to get to the reward. This is the same as any other job.
Check the costs before you start any journey. The risk is the danger, and the rewards are the good things that could happen.