subject: Risk Reward Ratio in Nifty option tips [print this page] Risk Reward Ratio in Nifty option tips Risk Reward Ratio in Nifty option tips
Risk and reward are proportional to each other and when it comes to option trading the more risk you are willing to take the more returns you will get. So, if you are willing to take risk on your investment then return on it will be greater than what you expected if things work out as you planned them.
It is important for the Nifty option tips traders to find the correct balance of risk and reward as both are proportional to each other. There is no set limit or a set amount that can be applied to everyone it all depends upon the individual trader that what is his risk appetite and risk tolerance. So, an individual trader's strategy towards risk and rewards decides the accurate ration between them.
In Niftyoption tips trading you can have a fine degree of balancing between risk and reward. Option trading is regarded as the most versatile trading instrument nowadays as one can employ different combinations of strategies to balance the risk and reward ratio. The different combinations employed by every individual trader can bring different results some can make over 1000% profit while risking all of their money and some can make only 0.01% profit by risking nothing at all.
Option trading involves your individual preference of taking personal risk and the limit of your risk tolerance and then you can come up with strategy within the option trading that suits you completely. But we should also realize that involving greater risk means you can incur greater loss as well instead of getting rewarded if things do not work out as planned. There are hundreds of possibleoptions that you can choose from in option trading and every single option has its own risk and reward ration but the basic concept underlines that the higher the risk taken higher will be the reward potential and lower the risk lower the reward vice versa.
In Nifty option tips trading if you opt for risk free trading opportunities you will find out that the lower risk means the returns would be negligible as well. But the problem is that the return on your investment is so low that it doesn't even cover the trading costs so, mostly what the traders do is take huge amount of risks by investing almost all of their money and that proves to give them huge amount of rewards as well.
Lastly, risk and reward ratio in option trading is said to be directly proportional to each other.
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