Risk / Reward
Understand how position size, stops, risk/reward and account exposure affect outcomes.
Risk / Reward
Risk/reward compares a planned potential gain with a planned potential loss. Ratios do not incorporate the probability of winning or execution costs. A high ratio can still accompany a negative expected result.
Example
Risking $20 for a potential $40 gain gives reward-to-risk of 2:1 before costs.
All educational content is provided for general information and educational purposes only. It does not constitute investment advice, financial advice or a recommendation to buy or sell any financial instrument. Trading leveraged products involves significant risk and may result in the loss of invested capital.