Definition Of Risk Versus Reward
To be clear risk management is not the elimination of risk but rather the responsible balancing of risk versus reward.
Definition of risk versus reward. I will use a very straight forward. Essentially it is a term that reminds investors to consider the risks of investments made compare those risks to the potential rewards associated with those investments and make an educated decision based on this knowledge. There are many contributing attitudes and perspectives that help day to day but in those times of making very difficult decisions i always weigh the potential risk vs potential reward. Reward by dave bocking for the last few years i have been able to navigate through life with very little resistance.
It is calculated by dividing the difference between the entry point of a trade and the stop loss order the risk by the difference between the profit target and the entry point the reward. Reward as a term in and of itself is pretty self explanatory. The risk reward ratio is used by many investors to compare the expected returns of an investment with the amount of risk undertaken to capture these returns.