Risk and reward ratio

eleanorK80

eleanorK80

The risk and reward ratio in cryptos is much higher, so you can potentially receive greater profits in this market compared to forex.

Which one is your preference: trading forex with less risk or trading crypto with more profits?
 
Using CAPM (the theory that Risk = Reward) as your guide and assuming you are talking about investing it seems Bitcoin is a better investment. It has survived multiple stock market cycles and hasn't gone to zero so it isn't a bubble in the traditional sense.

Most of the stocks that skyrocketed during the late 1920s boom either went bankrupt or never came back like RCA. The same is true in the late 1990s boom like LU, SUNW or CSCO. There is a good chance CSCO will never reach the 2000 highs, RCA never went back to its old highs and was bought out by GE in the late 1970s for a mere pittance.

On the other hand Bitcoin, Ethereum and a hand few others go higher & higher even after being called bubbles & Ponzi schemes by the usual suspects here on ET. It does seem though that a lot of the project based cryptocurrencies do not seem to last more than one cycle or like RCA never come back to its old highs. So there are bubbles in the cryptocurrency space as well (aka Moonshots). Bitcoin & Ethereum are like large cap tech stocks vs. other cryptocurrencies which are like small caps. Most small cap tech stocks don't make it especially the biotechs.

As for trading it should be the same but the time horizon does effect returns. Bitcoin used to move in tandem with the QQQ or FANG+ stocks but since the ETFs arrived it seems to move with the direction of economic indicators. Maybe with so many new investors it behaves more like the traditional markets.
 
Risk and reward ratio is higher? I assume you mean the potential reward is greater than the pre-defined risk.

This depends entirely on the strategy being used and how much room you give the trade to move against you before you're stopped out.

But Risk/Reward is just part of the game. You need to be considering overall expectancy by taking your winning and losing percentages into account.
 
eleanorK80 said:
The risk and reward ratio in cryptos is much higher, so you can potentially receive greater profits in this market compared to forex.

Which one is your preference: trading forex with less risk or trading crypto with more profits?
More...


The biggest risk in the market is always the trader himself, not the market.
 
As I have often repeated on ET what I learned long ago, risk is NOT how much you win or lose but IS whether you win or lose. The risk is to trade or not, the dollar amount won or lost the result.
 
eleanorK80 said:
The risk and reward ratio in cryptos is much higher, so you can potentially receive greater profits in this market compared to forex.

Which one is your preference: trading forex with less risk or trading crypto with more profits?
More...
I prefer to combine them, they are not purely correlated so some degree of diversification is achieved which is good.
 
PPC said:
The biggest risk in the market is always the trader himself, not the market.
More...
%%
THAT\
but have to consider whats on the other end also.RINOs take a lot of firepower
The whiskey[like crypto] aint workin' anymore\
thats what I'm lookin' for\
T Tritt\ Warner\RINO Records:D:D
4.44]4x or CRY.... O market??
Agree with Dave Ramsey, reader+ recommender of RINO Sucess book;
almost always more than >good 2 choices. :caution::caution:
777] Dave Ramsy sidekick /J Warshaw /create a checklist
888] Like UK fundmanager warned/dont run out of bullets/ then the elephant walks buy:caution::caution: Edit do price most in USa $$............................:D:D
 
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