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Risk reward ratio and Positive Expectancy Explained (Tagalog)

risk reward altcoin pinoy

Do you always track your trade?

Do you know your risk-reward ratio?

If the answer is yes, then you beat the 90% of traders out there.

Good for you!

Pero hindi lahat ng trader my idea about risk-reward ratio, hindi nila ito ginagawa kasi hindi nila alam.

Kung isa ka sa mga walang idea about the risk-reward ratio. Then this article is for you.

Kapag sinabing risk-reward ratio ito yung sukatan kung gaano kalaki ang potential reward na makukuha mo sa bawat dolyar na iririsk mo.

Sa mga trading platform, we normally use dollar not peso, kaya mas madali kung maiexplain kung dollar ang gagamitin ko as an example.

Kunyari ang risk reward ratio ko ay ganito “1:3” ang ibig sabihin nyan iririsk ko ang $1 sa potential reward na $3.

Sa 1:5 risk-reward ratio naman, iririsk ko ang $1 para sa potential na reward na $5.

Madali lang diba?

Ang ideal na risk-reward ratio na ginagamit ng mga traders ay ang 1:2  ratio. $1 risk for a $2 dollar profit.

Kahit sinong professional trader ang tanonging mo kung ano ang the best risk reward ratio na recommendable yan ang ibabato sayo.

But the thing is may isang drawback sa pag gamit ng risk-reward ratio.

let me explain.

Halimbawa, nag trade ka ng Sampung beses at ginamit mo ang risk reward ratio na 1:2. Which is the recommended of every traders.

Pero ang winning rate sa 10 trades na ginawa mo ay 20% lang.

Ibig sabihin sa 10 trades mo 8 ang talo at 2 ang panalo.

Dahil 1:2 risk-reward ratio ang finofollow mo, ganito ang calculation

Total gain =2*2= $4
Total loss =1*8= $8
Net loss = -$4

Lugi!

So what does it mean?

Kailangan ba mas mataas ang risk reward like 1:5 para maging profitable?

No!

Ang ibig sabihin risk-reward ratio will not work alone, kailangan mataas din ang win rate mo. Kahit 1:1 or 1:05 ang risk reward ratio mo, basta mataas ang win rate mo, you are still profitable in the long run.

Pero win rate will not work alone either, it’s the combination of risk-reward and win rate.

Kailangan mo silang pagsamahin para malaman mo kung ang strategy ba na ginagamit mo ay profitable in the long run.

At dito na papasok ang expectancy.

Ito yung formula

E= [1+ (W/L)] x P – 1

E=Expectancy
W=Size ng average win
L=Size ng average loss
P=Winning rate or percentage

Let me give you an example para mas maintindihan natin.

Halimbawa, tinatrack mo lahat ng trade mo at sa 50 trades na ginawa mo 30 dito ay winning trade at 20 naman ang lossing trade.

This is actually a realistic number, kasi wala naman trader na may 100 percent winning trade. So let’s stick with it.

Kung sa 50 trades na ginawa mo may 30 winning trades ka it means ang winning rate mo ay 60%(30/50)

Sabihin na natin na ang profit na nakuha mo sa 30 trades ay $2,000. Kunin natin ang average $2,000/6= $333.

Sa losing  trades mo naman dahil 20 times kang natalo na may kabuuang $1,200, kunin din natin ang average $1,200/4= $300.

Ngayon, ilagay natin ito sa formula

E= [1+ (W/L)] x P – 1

E= [1+ ($333/$300)] x 0.6 – 1 = 0.26 or 26%

Sa example na ginawa ko lumalabas na ang expectancy ng trading strategy mo, in the long run, is 26% a positive expectancy.

Ibig sabihin in $1 risk kada trade may makukuha kang return na 26 cents.

 I only calculated for 50 trades, mas maraming trade mas mainam. Kung kaya mo I calculate over 100 trades to 200 mas mabuti.

Dito mo malalaman kung gaano ka effective ang trading strategy na ginagamit mo by getting a positive expectancy.

“Positive expectancy is defined as how much money, on average, we can expect to make for every dollar we risk.”

So what is more important in trading your risk-reward ratio or win rate?

Good question. But the answer is none of them.

Ang mas importante ay ang Positive expectancy.

Ginagawa ba ito ng mga kakilala mong traders?

No!

90% of traders don’t know about positive expectancy. Masyado silang naka focus sa technical analysis, win rate, etc.

If you know your win rate, risk-reward ratio, and expectancy, you are ahead of 90% of traders out there.

Kaya kung hindi mo tinatrack ang bawat trade mo, siguro dapat simulan mo na ngayon.

Kasi hindi mo ito maiaaply kung hindi mo itatrack ang lahat ng trades mo.

Naiintindihan ko nakakatamad sya gawin, kasi it requires mathematics. Alam ko yan, hindi rin ako mahilig sa math. Pero I know kung gaano ito kahalaga sa trading.

I read several articles and do some research about positive expectancy and risk-reward ratio, para naman mas maiexplain ko ito ng maayos sa inyo. Sana may natutunan kayong bago rito, and good luck to your trading journey.

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