Category: Risk Reward Ratio

A calculated risk is taken when the probability and size of potential success is estimated along with the magnitude of a possible loss is considered before a decision is made…

There is a common saying on Wall Street “Let winners run and cut losers short.” This quote tries to express the principle of creating big wins or small losses. Creating…

To manage the risk of ruin in trading position sizing should be managed to never lose more than 1% to 2% of total trading capital on any one trade. If…

After an entry the risk/reward ratio quantifies a trades potential for loss size versus the size of possible profits. When backtesting signals the average size of all the losing trades…

The Risk of Ruin (Also called the RoR) is a statistical model in trading which quantifies the probability a trader will eventually blow up and lose all of the trading…

CAGR stands for ‘compound annual growth rate’ and is used in business, investing, and trading as a term for the measurement as a geometric progression ratio providing a constant rate…

Here are ten reasons a stop loss is so important in trading: A stop loss defines your price risk by quantifying what price level you will exit a trade at. …

In trading as in life there are both risks and rewards to consider before you start any journey. You have to ask yourself are the risks of loss worth the…

On trade entry the risk/reward ratio measures a trades potential for loss versus the magnitude of possible profits. In backtesting the average of all the losses in a system compared…

This is a Guest Post by Niclas Hummel, creator of the Risk Simulator and a trader living in Bangkok. A Monte Carlo simulation projects your trading system’s equity curve into the…