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..!
As informações e publicações não devem ser e não constituem conselhos ou recomendações financeiras, de investimento, de negociação ou de qualquer outro tipo, fornecidas ou endossadas pela TradingView. Leia mais em Termos de uso.
As informações e publicações não devem ser e não constituem conselhos ou recomendações financeiras, de investimento, de negociação ou de qualquer outro tipo, fornecidas ou endossadas pela TradingView. Leia mais em Termos de uso.