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.

 

[kit_hung]

In investing there is something called risk reward ratio
This means you measure the profit you can get and the loss you can incur
Everyone needs to understand this before investing their money

You calculate it by dividing the profit you expect by the loss you can incur
If you see that the profit is greater than the loss then that is a good investment
But don't put all your money in one thing so you don't lose everything

 

[Augusta]

The risk-to-reward ratio is an important concept to consider when using stop loss and take profit orders. This ratio is the potential profit divided by the potential loss.

 

[Min George]

The higher the risks you take, the higher the rewards you should expect from the investment. If it goes the other way, the higher your loss.