The risk & reward ratio in trading is a part of Money Management. The first thing that must be done before setting up a trading strategy is calculating the risks that are ready to be accepted by the traders from Morocco so that the trading results are realistic. In another sense, the first thing to do is determine the stop loss level first, then determine the take profit according to the planned risk & reward ratio. Meanwhile, you can go to http://www.arabforex.pro/en/morocco/ if you need the best broker in Morocco.
For example, the stop loss level that is ready to accept is 50 pips, then with a 1: 2 ratio, the set take profit level is 100 pips.
Another way that can be used to determine the stop loss using money management is by calculating the risk & reward as a percentage. In the simplest Money Management theory, it is said that it is not good for traders from Morocco to risk funds exceeding 2-3%, so it is on that value scale that we should place Stop Loss.
In this case, it will also affect the use of the lot to be used.
The second method that can be used by traders from Morocco in determining stop loss and take profit is to determine the stop loss and take profit levels based on the price action pattern that is taking place on the chart.
Several ways can be used, including:
Determine stop loss and take profit with support and resistance
First traders from Morocco must determine the Support or Resistance line
Calculate the approximate distance of the order position with the support or resistance level
Determine the use of lots and risk management according to the distance between the order position and the stop loss line at support or resistance
If the support line acts as a stop loss level, then the closest resistance level will be the place to place take profit.
Conversely, if the resistance line acts as a stop loss level, then the closest support level will be the place to place take profit