One major similarity between poker and trading is that they both involve incomplete information. A poker player may have a strong hand, but he or she is still not 100% sure of what cards other opponents hold. The same thing applies to an investor/trader who may predict a good return but may not be 100% of it. So, decisions in poker and trading are often based on incomplete information.
Once the market has dealt the hands (provided us traders with information of market behaviour) we can play the hand, stronger the hand the higher the probability of the trade becomes.
How much do we want to risk ??
With due diligence, we need to know the EV+ ( Positive Expected Value) and RMultiple expectancy and with this information we can assume a 60-70% chance of making money and now its up to how much we are willing to risk on the trade.
Risk Management
Position size of £100 with a 10x leverage = £10.00 Risk Per Percentage
With a 2/1 RR, the Reward Per 2% = £20.00
Once the market has dealt the hands (provided us traders with information of market behaviour) we can play the hand, stronger the hand the higher the probability of the trade becomes.
How much do we want to risk ??
With due diligence, we need to know the EV+ ( Positive Expected Value) and RMultiple expectancy and with this information we can assume a 60-70% chance of making money and now its up to how much we are willing to risk on the trade.
Risk Management
Position size of £100 with a 10x leverage = £10.00 Risk Per Percentage
With a 2/1 RR, the Reward Per 2% = £20.00