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One of the most important lessons in stock trading for beginners is to understand a proper risk-reward ratio.

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The financial markets are like anything else in life: if supply is near exhaustion and there are still willing buyers, price is about to go higher.

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Insist on a risk-reward ratio of at least 3:1 when setting your targets.

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In fact, once you gain some experience, risk-reward ratios of as high as 5:1 or even higher may be attainable.

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