Understanding Risk-Reward Ratio in Investments

[Nomad]

One of the most important concepts that you will have to understand while investing is the risk-reward ratio, which measures the potential returns on investment as compared to the risk involved with your investment. You can calculate risk-reward ratio by dividing the expected return by the amount of money at risk. A higher risk-reward ratio means a more favorable investment opportunity. You need to understand risk reward ratio to make investment without major risk

 

[King Belieal]

There are no two ways about it. Anyone that is not willing to take big risks would just have small yields for their investments.

 

[Augusta]

This is the amount you could lose if the investment doesn't go as planned. Expected reward – This is the amount you expect to gain if things go well.