Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Every investment involves a possible gain and a possible loss. The risk/reward ratio compares how much you could lose to how ...

The risk/reward ratio or risk/return ratio is a commonly used metric in trading that compares the potential profit of a trade with the potential loss. That said, it’s the reward traders stand to make ...

In forex trading, understanding how to manage risk is just as crucial as identifying potential profit opportunities. One of the key tools used by successful traders to balance risk and reward is the ...

Many investors use the capital asset pricing model (CAPM) as a way to estimate the potential return of a stock or other asset within the context of its intrinsic risk. Used primarily to analyze ...

What Is the Risk-Reward Calculation? Are you a risk-taker? When you’re an individual trader in the stock market, one of the few safety devices you have is the risk-reward calculation. The actual ...