The risk/reward ratio (also known as the R/R ratio) measures the potential profit and loss of a trade. Risk is determined by the difference between the entry point of a trade and the stop-loss order, and reward is found by the difference between the profit target and the entry point. It is used to assess the potential profit (reward) of a trade relative to its potential loss (risk). Both the risk and reward of trade are based on lines that the trader sets.Risk is the potential loss determined by a stop-loss order. It is the difference between the entry point for a trade and the stop-loss order.Reward is the total potential profit, established by a profit target. At this point, security is sold. Your reward is the amount you could gain from the trade. This is the difference between the profit target and the entry point.

A risk reversal is a hedging strategy that protects a long or short position by using put and call options. This strategy protects against unfavorable price movements in the underlying position but limits the profits that can be made in that position.

The risk/reward ratio measures a trade's potential for profit (reward) compared to its potential for loss (risk). Trading involves risk and reward based on lines set by the trader.

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Question -

What is RR?

6 Answer

Charles Farley

Answered 1 year, 7 months ago

<p id="isPasted">The risk-reward ratio in trading is a quantitative measure that assesses the potential profitability of a trade relative to the associated risk. It is expressed as a ratio, comparing the expected gain from a trade (potential profit) to the amount that a trader is willing to risk or lose (potential loss). The formula for calculating the risk-reward ratio is:</p><p>Risk-Reward Ratio= Potential ProfitPotential LossRisk-Reward Ratio/Potential LossPotential Profit</p>

What is RR?

6 Answer

6 Answer

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