#RiskRewardRatio The risk-reward ratio, also known as the risk-return ratio, is a mathematical calculation used by investors to measure the expected gains of a given investment relative to the risk of loss. The risk-reward ratio is typically expressed by a number representing the estimated risk, separated by a colon from a number representing the expected reward. In general, this ratio determines the relationship between potential losses in the event of investment or action failure, and the return realized if things go as planned. For example, a risk-reward ratio of 1:3 means that for every dollar at risk, there is a potential gain or reward of 3 dollars.