Research method
Risk-reward ratio
Risk-reward ratio is a canonical archive-taxonomy method; this registry entry defines its inputs, output and use boundary.
- Output
- Research filter
- Input
- Account equity, volatility, stop distance and exposure
- Horizon
- Before entry and throughout the position
- Best use
- Keep a loss or exposure decision bounded before a trade is placed.
- Input: Account equity, volatility, stop distance and exposure.
- Output: filter.
- Use boundary: Keep a loss or exposure decision bounded before a trade is placed.
The graph4
How the method is built, and where it has been read
Depends on
Often reviewed together
Pre-trade checklist6 readings
Often reviewed together
Expected value7 readings
Often reviewed together
Trading psychology process8 readings
Often reviewed together
Stop-loss order14 readings
Read in the archive24 of 78 readings
1987Precommit the stop and require a surplus payoff1987When open losses overwrite precommitted exit rules1991After a Wyckoff bias, rank leftover cause and keep three-to-one stops1991Ranking month-end holds with risk-reward and stops1992Filter size by expected value and ruin1994Evaluating percentage profit exits on trend-following averages1994Market life expectancy as a risk filter1994Bound small-account risk before adding leverage1995A pre-trade checklist that bounds loss before the order1998An offense-defense matrix for regime-aware stock selection1998A return-to-loss filter for drawdown-aware evaluation1999Pyramiding after a maximum favorable excursion support2000Pair historical volatility with return-to-loss filters2000Budget the loss before entry with stops and position limits2001Constructing vertical debit spreads with a preset risk-reward filter2001Construct reward to risk before entry2002Size from stop distance to keep dollar risk even2003A pre-trade readiness checklist for entry, abstention, and risk2003Evaluating out-of-the-money strikes with saddle premiums and implied volatility2003Calendar spread construction by volatility skew2004A pretrade risk lockbox at Elliott ABC ends2004Name the stop, require a 1:3 reward, then scale out half2004A critique of one-procedure trading decisions2004A day-trading breakeven matrix for size and win rate
This registry entry describes a research method. It is not investment advice and does not make a performance claim.