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Reward:Risk Ratio
Assessing a Trades Potential
When looking at a stock to buy, we look to various tools and techniques to
help us assess the probability of its upward movement. However, will it go up
is not the only question to ask - we also need to analyze the chart to see
how far it is likely to go up and also how much of a loss we are willing to
take to allow it to reach it's profit potential. The potential profit of a
trade divided by the potential loss of trade is known as the Reward:Risk Ratio.
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Happy Trading,
Nirvana Systems
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