risk-reward ratio

risk-reward ratio

/rɪsk rɪˈwɔːrd ˈreɪʃioʊ/

🎯 Trading Strategies & Orders

the expected profit of a trade compared to its potential loss, used to evaluate trade quality

A risk-reward ratio of 1:3 means risking $100 to potentially make $300.

Origin: Risk from Italian risco danger + reward from Old French rewarder to look at