The Risk/Reward (R/R) ratio is a measure that compares the maximum profit an investor can achieve with the maximum loss they are willing to accept in a trade. The formula to calculate R/R is as follows:

R/R = Stop Loss Level / Take Profit Level

Suppose you plan to buy a stock at 100,000 VND. You set your stop loss at 95,000 VND and your take profit at 110,000 VND.

R/R = 5,000 VND / 10,000 VND = 0.5