Risk Reward Ratio

Risk-reward ratio is a concept in trading that refers to the balance between the potential profit and potential loss on a trade. It is calculated by dividing the expected return (or reward) by the risk, which is typically defined as the amount of money that could be lost on a trade.

For example, if a trader is considering a trade with a potential profit of $100 and a potential loss of $50, the risk-reward ratio would be 2:1 (100 / 50 = 2). This means that for every dollar at risk, the trader is expecting to make two dollars in return.

The risk-reward ratio is an important consideration for traders because it can help them determine the level of risk they are willing to take on in order to achieve a certain level of return. It can also help them evaluate the potential profitability of a trade, as well as the potential risk-to-reward ratio of different trading strategies.

In general, a higher risk-reward ratio is preferred because it means that the potential return is greater relative to the risk. However, traders should also consider other factors such as the likelihood of the trade being successful and the overall risk profile of their portfolio

For Signals we give you a 1:1 Risk Reward Ratio for the from the Entry price to your StopLoss with respect to the first Take Profit TP1