Risk-Reward Ratio

What it means

Risk-reward ratio compares planned loss to planned gain, which helps traders judge whether a setup is worth taking.

What to watch

A good-looking ratio means little if the target is unrealistic or the stop ignores normal market movement.

Where traders usually run into this

Risk-Reward Ratio is most useful once it is tied to a concrete page, chart decision, or workflow question.

• Risk/Reward Calculator keeps this term attached to a real tool instead of leaving it as standalone jargon.
• Position Size Calculator keeps this term attached to a real tool instead of leaving it as standalone jargon.
• Drawdown keeps this term attached to a real glossary instead of leaving it as standalone jargon.

Best next page if this term is blocking you

If you understand the definition but still do not know what to do with it, start with Risk/Reward Calculator. That page is the fastest way to see how risk-reward ratio shows up in a real tool workflow.