Setup a Profit vs Loss Ratio

A strategy that can greatly benefit both new and experienced cryptocurrency traders is utilizing profit vs loss ratios. By itself a profit vs loss ratio is nothing more than a plan that is put in place in order to limit losses on a trade by defining a maximum loss percentage, while also setting a target profit percentage. The ratio is determined by these two factors, and is often set at about 3 to 1. For example, this could mean a target profit of 15 percent versus a maximum loss percentage of 5 percent.

With proper discipline every trade should subsequently be closed once it reaches either limit. Technically, this means that two losing trades and one winning trade will still result in an overall profit. Due to the volatile nature of Bitcoin this does require active monitoring, as sudden swings could cause the price to exceed the intended limits.

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One Response

  1. Christopher Barbara September 28, 2021