Why Risk Management is so Important? 📌

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Why risk management is so important! http://www.financial-spread-betting.c... PLEASE LIKE, SUBSCRIBE AND SHARE THIS VIDEO SO WE CAN DO MORE! We know that as traders we want to have a good probability of success (i.e. high win rate) but we also want the risk/reward ratio to be as high as we can. But we also realise that it can work both ways - the win rate could be as low as 10% - if just 1 in 10 trades work but if it makes 50 times the money you lose everytime you win you know that you will end up making time over time. So we have this balance that we have to make as traders. Say we have a trading strategy with a 50% chance of success Risk/Reward ratio: 2:1. If we have this kind of strategy we will make money in the long run. But why is risk management important? Even with this winning strategy we can have a string of losing trades that could potentially wipe you out. Don't rely on luck to keep you in the game...

Why risk management is so important

Strategy 50%

Wins +$1000

Loses -%500

$5,000 10%

$10,000 5%

$25,000 2%

$50,000 1%