#RiskRewardRatio

What is the Risk/Reward Ratio?

The risk/reward ratio—also known as the risk/return ratio—indicates the potential reward an investor can earn for every dollar they risk in an investment. Many investors use risk/reward ratios to compare the expected returns of an investment with the amount of risk they must take on to earn those returns. A lower risk/return ratio is often preferred as it signals less risk for an equivalent potential gain.