The risk-reward ratio helps traders evaluate whether a trade is worth taking.
Formula
Risk-Reward = Potential Loss / Potential Gain
Example
Buying Samsung at 70,000 KRW:
- Stop loss at 67,000 (risk: 3,000)
- Target at 79,000 (reward: 9,000)
- Risk-Reward = 1:3
Guidelines
| Ratio | Quality |
| 1:1 | Need >50% win rate to profit |
| 1:2 | Good — need >33% win rate |
| 1:3 | Excellent — need >25% win rate |
Applied to Asian Markets
Volatile markets (India, Indonesia) offer better risk-reward setups because price swings are larger. Less volatile markets (Singapore, Hong Kong) require tighter setups.
Always define your risk-reward BEFORE entering a trade, not after.