ratios to express relationship of return to risk

Definition

Forex

  • A computed estimate of an investment's potential for loss divided by its expected reward. Forex traders often use certain ratios to express relationship of return to risk as criteria for taking on a position in a currency pair. For example, an estimated risk/reward ratio of 1:2 for a position might attract some traders.
http://www.dictionarycentral.com/definition/ratios-to-express-relationship-of-return-to-risk.html