Chapter 13: The Risk to Reward Ratio

Question 1

The risk/ reward ratio ______ the risk a trader takes for a possible reward

Answer 1

calculates

Question 2

divide the ______ risk by the net target profit

Answer 2

maximum

Question 3

next, decide where you want to take the ______ in case the trade becomes successful

Answer 3

profits

Question 4

also have to decide where you want to place the stop-loss in case the trade is a _____ one

Answer 4

losing

Question 5

expert traders _____ stop losses and profit targets before they enter a trade

Answer 5

set

Question 6

once you have both your ______ and entry targets, you can start calculating your risk to reward ratio

Answer 6

exit

Question 7

divide the ______ risk by the potential reward

Answer 7

potential

Question 8

the lower the ratio, the more potential reward you can derive for every ______ of risk

Answer 8

unit

Question 9

asymmetric opportunity

Answer 9

possible upside is better than the possible downside

Question 10

take note of the _______ rate

Answer 10

win

Question 11

win rate

Answer 11

number of winning trades divided by the number of losing trades