Why Trade? – the Question You need to Ask before you Start

Why Trade?

This post is the first in a series of posts I am writing to guide you in getting started trading. It is the start of my Free Investing and Trading For Beginners Course. You could skip this post and go straight to the next post if you feel that the answer to the question “Why Trade” is not of value to your trading. But for me answering this question changed me from being a break-even trader to a trader with an edge in the markets. Trading consistently profitably is hard and it takes a lot of practice. Therefore let’s talk first about a fundamental question most people skip before they take up the challenge of trading or any other challenge for that matter.

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Where to Put Your Stop Loss

Where to put your stop loss

So I talked about “What is R in Trading” and why it is so important to understand. I hope I made clear that R lets you focus on and manage Risks by always setting a stop-loss order to take you out of a position automatically if things turn against you. Now, after writing that I was thinking: Where would I place my stop loss? How do I do it? And can I explain how I usually place my stop-loss orders? Interested in knowing how I do it? I will give it a shot and do my best to explain it to you.

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What is R in Trading?


And Why is R So Important to Understand?

R in Trading is an objective way to think about success or failure in a trade. R expresses the (possible) return on a trade as a multiple of the risk taken on by that trade.

In my trading log, I register the amount of R I make. Also in my trading videos and ideas, I always talk about targets, for example, as 2R or 3R. You may have wondered why I am doing that. Why don’t I just talk about pips, points, or dollars risked, won or lost on a trade?

To answer these questions in full, we need to dive more deeply into the concept of R in trading. We will look into Risks, Returns, Probabilities and how these relate. Let’s go!

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