Preparation of risk management rewards need not be complicated, even very simple. You just need to answer the two questions below:

How much profit you want from each transaction? How much money you’re willing to put into risk to benefit them?
After you answer, divide the amount of profit to the amount of risk you burn Relax, and as a result you have to get your own reward risk ratio.
Win to Ratio
This ratio is intended to measure how big a percentage of wins versus losses of risk management generated by the trading system. To get it you would have to have a risk management system first, construct the system and test results in the form of back testing forward testing or using the demo account.

You can also do a visual test through the charts if it was easy to do. After that, record the results of how many times the system is making a profit and how often result in failure. Thus risk management you have to get a win loss ratio.

Pareto Principle
“Vital few and trivial many”. Pareto Principle says that 20% of the things that always gets results 80%. Or in other words, 80% of the results obtained from the 20% activity, and 20% of the results are always obtained from 80% of the activity. In terms of trading, the effective profit comes only from a small portion (20%) of your transaction activity.

You do not have to adopt this principle is exactly the figure, the most important thing we must understand is that most of the trading activity usually accounts for only a small part to the growth of our capital.

For example, risk management, say the method has a probability of 60% and a whopping 40% victory. The above principles can be run as illustrated below:

10 Transaction EUR / USD; each transaction has a SL 50 points and TP 100. 6 of the transaction hit stoploss and produce losses, four others making a profit.
6 Transaction Loss x 50 points (pips) x $ 10/poin = – $ 3,000
4 Transaction Profit x 100 points x $ 10/poin = + $ 4,000
Net Profit / Loss = $ 1,000 +
This means that by managing your trading risk management, though still poor methods you can use to generate profit.


Risk Management In Forex (III)