1:0.98 Risk/Reward
Entry at $500.00, stop-loss at $12.00, target at $20.00 gives a risk/reward ratio of 1:0.98.
Risk/Reward Ratio
1:0.98
How This Works
Risk/reward ratio compares how much you stand to lose (entry to stop-loss) against how much you stand to gain (entry to target). Many traders look for ratios of at least 1:2 or better before entering a trade.
Formula
Risk/Reward = |Target − Entry| ÷ |Entry − Stop-Loss|
Example
Entry at $50, stop-loss at $48, target at $56 gives a risk of $2 and reward of $6 — a 1:3 ratio.
Frequently Asked Questions
What is the risk/reward ratio for this trade?
1:0.98.