Course Content
What Is the Risk/Reward Ratio and How to Use It
Should I risk my time to get rewarded with the information in this article? The risk/reward ratio tells you how much risk you are taking for how much potential reward. Good traders and investors choose their bets very carefully. They look for the highest potential upside with the lowest potential downside. If an investment can bring the same yield as another, but with less risk, it may be a better bet. Interested to learn how to calculate this for yourself? Let’s read on. Contents Introduction What is the risk/reward ratio? How to calculate the risk/reward ratio The reward/risk ratio Risk vs. reward explained Closing thoughts
What Is the Risk/Reward Ratio and How to Use It
About Lesson
We’ve looked at what the risk/reward ratio is and how traders can incorporate it into their trading plan. Calculating the risk/reward ratio is essential when it comes to the risk profile of any money management strategy.
What’s also worth considering when it comes to risk is keeping a trading journal. By documenting your trades, you can get a more accurate picture of the performance of your strategies. In addition, you can potentially adapt them to different market environments and asset classes.
Do you still have questions about calculating risk and reward? Check out our Q&A platform, Ask Academy, where the Binance community will answer your questions.