Risk / Reward Ratio


Risk / Reward Ratio:

Risk / Reward Ratio is the amount of money you are willing to lose divide by the amount of money you are expecting to make.

Example: 
If you are buying a share at $100 and your stop lose is at $90(you are willing to lose $10)
You have target is $120(you are expecting to make $20)
Your Risk / Reward Ratio is 10 / 20 = 0.5 or commonly use 1:2