Get this right and your whole involvement in crypto starts to make sense.
Before we get into the formula, get this - if your WIN RATIO is 12%, it means that you can go to the bank... borrow 1 million dollars for 6% and profit 6% of off a million of someone else's money!
Knowing this formula enables you to quickly and easily determine if crypto is the right for you
(%w x aw) - (%l x al) = WIN RATIO
%w = percentage of wins
aw = average win size
%l = percentage of losses
al = average loss size
do it over the 100 trades and you have a pretty decent idea of how you're doing.
Many beginning traders fail to do proper risk to reward.
It is when you risk one dollar to get 2 or more, versus when you risk one to get +0.5
Many intermediate losers miss great EDGE trades just because they read somewhere risk to reward should be greater than 1:1
This is a lesson I just recently learned. I have asked a top trader why is his R:R infavorable and he answered to me quite simply: "the odds of it going up and down is not the same".
If you know the reasons it should go up and have edge good enough, you can get 4 times in a row "heads" before you get tails... especially if the coin is 'magnetized' like many things still in crypto are.
So my friend, calculate your winning edge and feel free to share it in the comments below.
Answering this helps you determine what type of crypto investor you should be: a day trader or a hodl-er.