Risk/Reward Ratio

A ratio of desired profit to accepted amount of loss usually implemented as stop loss and target order. For example trader might want to risk $100 in hope to make $300 with risk/reward ratio of 1:3.

Example of trades with risk/reward of 1:3

In example below trader risks $1 buying 100 shares or $100 targeting profit of $3 or $300.

Symbol Quantity Stop Entry Target
AAPL 100 $96.34 or -$1 $97.34 $100.34 or +$3
AAPL 100 $98.45 or -$1 $99.45 $102.45 or +$3
FB 200 $111.71 or -$0.5 $112.21 $113.71 or +$1.5

Markets Chart