<p>The <strong>marginal product</strong> in trading is the additional profit or loss generated by a single unit change in an investment. It's a key concept in understanding the risk-reward dynamics of your trades.</p>

<h2>How It Works</h2>

<p>The marginal product can be calculated using the following formula:</p>

<table>
<tbody>
<tr>
<td><code>Marginal Product</code></td>
<td>=</td>
<td><code>Change in Profit</code></td>
<td>/</td>
<td><code>Change in Investment</code></td>
</tr>
</tbody>
</table>

<p>For example, if you invest $100 in a trade and make a $50 profit, your marginal product is $0.50 ($50 profit / $100 investment).</p>

<h2>Why It Matters for Traders</h2>

<ul>
<li><strong>Risk-Reward Assessment</strong>: Marginal product helps you evaluate the risk-reward ratio of your trades. A higher marginal product indicates a more profitable risk-reward ratio.</li>
<li><strong>Diversification</strong>: It can guide your portfolio diversification. By comparing marginal products across different assets, you can allocate your capital more efficiently.</li>
<li><strong>Stop-Loss Placement</strong>: Understanding marginal product can help you place stop-loss orders more effectively. If your marginal product is high, you might be more willing to accept a larger stop-loss to potentially capture more profit.</li>
</ul>

<h2>Example</h2>

<p>Consider two trades on STB Provider's MetaTrader 5 platform:</p>

<ul>
<li>Trade A: Invest $100, make $50 profit. Marginal product = $0.50</li>
<li>Trade B: Invest $200, make $100 profit. Marginal product = $0.50</li>
</ul>

<p>In this case, both trades have the same marginal product, indicating that the risk-reward ratio is the same for both trades. However, Trade B has a higher potential profit due to the larger investment.</p>

<h2>Key Takeaways</h2>

<ul>
<li>The <strong>marginal product</strong> is a measure of the additional profit generated by a single unit change in an investment.</li>
<li>It's calculated as the change in profit divided by the change in investment.</li>
<li>Marginal product helps traders assess risk-reward ratios, diversify their portfolios, and place stop-loss orders.</li>
</ul>