What Is The Risk/reward Ratio? - Forex Forum

 
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> What Is The Risk/reward Ratio?
Arnaud Jeulin
post Jun 16 2008, 10:26
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What is the risk/reward ratio?

The risk/reward is the ratio between the potential gain and the potential loss.

Example: We have a target at +100pips and our stop is at -50pips. Our risk/reward ratio will be 50/100 = 0.5

In the technical analysis we try to have a risk/reward < 0.5. Our potential gain should be twice of our potential loss.
More the trend is clear more we accept high risk/reward.
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