#RiskRewardRatio Calculating the Risk/Reward Ratio:

Determine the Risk (Potential Loss):

Determine the Reward (Potential Profit):

Calculate the difference between the target price and the entry price.

Calculate the Ratio:

Divide the potential profit by the potential loss to get the risk/reward ratio.

Example:

Entry Price: $50

Stop-Loss Price: $48

Target Price: $56

Calculations: