Risk/Reward

Risk literally is exposure to the chance of injury or loss. The term risk and markets are interwoven, given the inseparability of both. The markets play on the risk sentiment of traders, given their vulnerability to greed and fear — the two most common emotions that drive traders in their...

If somebody asked you to explain risk/reward, what would you say? You’d probably say that it tells you if there’s enough upside profit potential to justify the risk. You’re right, but how do you know? Did you know that risk/reward is a calculation and professional traders would tell you that if...