Risk-reward ratio

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Also found in: Acronyms.

Risk-reward ratio

Relationship of substantial reward corresponding to the amount of risk taken; mathematically represented by dividing the expected return by the standard deviation.

Risk-Reward Ratio

The ratio of the standard deviation of an investment to its expected return. The higher the ratio is, the lower the return for the amount of risk one is taking. This can inform one's investment decisions. See also: Risk adjusted return on capital.
References in periodicals archive ?
Power Course Instructor's Response: Sure- In any type of trading scenario, not only triangles, the 1:2 Risk Reward Ratio can be employed.
Next, never put more than 5% of your account at risk at any one time and always trade with at least a 1:2 Risk Reward Ratio in place.
Suggested Strategy * Short: Half-sized entry orders will be placed at 137.10 for better risk reward ratio. * Stop: An initial stop of 138.35 is wide enough to cover the volatility in a false break.
Based on the Daily chart that you post, even a stop of 20-40 pips would provide a favorable risk reward ratio for the trade.