thank you but thats what I dont understand I see people out there making more than the 2:1 profit loss ratio but still only have a 2:1 profit loss ratio. Do I sound ignorant or do you understand what Im trying to get at?If you pay $1000 to buy shares in a particular stock and the share price doubles, you will have made a profit of $1000, or 100%.
The most you could have lost would have been $1000, assuming the share price fell to zero, but when you sold the shares you received $2000, so the profit:loss ratio is 2:1.
But why would you let the share price fall all the way to zero? If you set a stop-loss order for your broker to sell your shares if their price fell 10%, then you would only be risking $100. In this case, your risk would have been $100, you sold your shares for $2000, so your profit:loss ratio would have been 20:1.
I don't understand what you're getting at.thank you but thats what I dont understand I see people out there making more than the 2:1 profit loss ratio but still only have a 2:1 profit loss ratio. Do I sound ignorant or do you understand what Im trying to get at?
It sounds like you are under the impression your profit is somehow dependent on, or limited by, the width of your stop loss.I am having a hard time understanding profit loss ratio i am new to this so sorry if I sound stupid.
How is the profit loss only 2:1 on stocks that run up a 100% when the stop loss would be so much lower than the intended profit target?
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