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HOW DO I CALCULATE THE RISK TO REWARD OF A SIGNAL?

HOW DO I CALCULATE THE RISK TO REWARD OF A SIGNAL?

The best way to calculate your Risk to Reward in Forex is by using pips as a measure from entry point to stop loss and take profit target. If the risk to reward ratio is 1:3, this means that for every 1 dollar you are willing to risk, you will gain 3 dollars in reward.

Risk-reward ratio = Absolute value (Price entry value – stop loss value) divided by Absolute value (Price entry value – Target price value)

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