Most investors use Risk to Reward ratio to show the estimated gain or loss of an investment or trade. The outcome in most cases is a fraction,like 1/3,1/4,..1/10.
The number above the fraction bar is the Risk (numerator), and the one below the fraction bar is the Reward(denominator).
I believe using the reversed ratio is better and helping the investors learn it more easily so I usually use Reward/Risk. The result is a single number which helps the investor or trader to get the concept much better.
To wrap it up, reward to risk ratio means the amount you could earn by risking a fraction of your capital.
For instance, if you buy a share for 100 dollar and your estimated target is 150 and your stop loss is 90 dollar, then your
Risk/Reward is : 10/50=1/5
Reward/Risk is 50/10=5
Both means you are risking 10 dollars to make 50 dollars..! So use what ever is easiest to learn for you..!
Reading between the lines: when you define the Reward/Risk (risk/reward), it means you have basic setup needs for a good trading execution. It means I’m aware of the risk of trading and accept it to make money. It also means I have a defined trade entry and exit plan.
I hope you find this helpful. Please write your question in comments, I will try to answer them.
Please check the links to other related materials.
Stay tuned great live stream and quality content videos coming soon..!
Wish you endless profits
Moshkelgosha(Sniper Trader)
The number above the fraction bar is the Risk (numerator), and the one below the fraction bar is the Reward(denominator).
I believe using the reversed ratio is better and helping the investors learn it more easily so I usually use Reward/Risk. The result is a single number which helps the investor or trader to get the concept much better.
To wrap it up, reward to risk ratio means the amount you could earn by risking a fraction of your capital.
For instance, if you buy a share for 100 dollar and your estimated target is 150 and your stop loss is 90 dollar, then your
Risk/Reward is : 10/50=1/5
Reward/Risk is 50/10=5
Both means you are risking 10 dollars to make 50 dollars..! So use what ever is easiest to learn for you..!
Reading between the lines: when you define the Reward/Risk (risk/reward), it means you have basic setup needs for a good trading execution. It means I’m aware of the risk of trading and accept it to make money. It also means I have a defined trade entry and exit plan.
I hope you find this helpful. Please write your question in comments, I will try to answer them.
Please check the links to other related materials.
Stay tuned great live stream and quality content videos coming soon..!
Wish you endless profits
Moshkelgosha(Sniper Trader)
