The risk-reward ratio calculator for mt4 refers to an indicator that calculates the ratio of risk to the profits earned per trade and shows on the chart real-time. it is also denoted by RR.
Here risk means the amount of money to be invested in a trade. Reward means the amount of money earned by investing in a trade. It can be a negative or positive amount.
Why risk-reward is important?
This is the most basic concept of risk management in technical analysis trading. If you are not managing your trade with a proper risk to reward ratio then you are missing a big opportunity to become a profitable trader.
The forex market is a trillion-dollar market. It is not easy to profit from this market because you are competing with traders from all over the world. While trading, sometimes you’ll lose, and sometimes you’ll win. Sometimes, you will lose many trades in a row and it will create a great impact on your trading account and your psychology. But a good risk-reward ratio help to tackle this situation
How risk-reward is calculated in mt4
For example, you open a trade in EURUSD currency pair in MetaTrader 4 platform. The size of stop-loss is 20 pips and the size of take-profit is 40 pips. Fortunately, you won in this trade. Calculate the RR ratio.
Risk amount (in dollars) = $20
Reward amount (in dollars) = $40
Total RR ratio = Risk / Reward = $20/$40 = ½
It means the RR ratio of this EURUSD trade is 1 ratio 2.
MT4 risk-reward indicator working
Mt4 risk-reward indicator has made it easy to calculate the RR in trading. It will show the real-time results of running trades on the chart. So you don’t need to calculate the risk-reward each time for every trade. This mt4 indicator will do this task for you.
What is the best RR ratio size?
The optimum RR ratio always depends on the trading strategy. But the risk-reward ratio must be greater than 1:2. For example, you win three trades and lose five trades then again you will be profitable in the end.
Conclusion
The risk-reward ratio mt4 indicator is the best tool to use while trading. It will help you in risk management and save a lot of time. A profitable trading strategy always consists of a better risk management system.
Download