Risk/Reward Ratios in Forex Tradingby Jeff Boyd Authors & Publishers Inc.
Think about the risk/reward ratio before entering each trade. How much money can you lose in this trade? How much can you gain? Now, make a decision if the trade is worth entering. Example: if a trader is looking for a possible 35 pips gain and a possible 25 pips of loss, such conditions are not worth trading. Compare it with the situation when a trader has 100-120 pips of potential gain and only 10-20 pips of possible loss. This is the trade to open!