LESSON 10 ~11 MIN · AT YOUR OWN PACE
Risk management calculations
Understand Entry, Stop, quantity and planned loss.
STEP 4 OF 4
Reward-to-risk and actual results
With a Target of 110, an Entry of 100 and a Stop of 95, the planned reward is 10 and the risk is 5 per share, which is 2:1. A good-looking ratio does not guarantee a win rate or a profit.
AN EXAMPLE
With 10 shares, reaching the target is a gross +100; a fill at the Stop is −50. But many stop-outs or costs can still add up to a total loss.
RememberLook at the risk budget, your understanding of the product, and execution: all three. Do not chase the ratio alone.
Sources and further reading
Sources in English · Content reviewed on 28 September 2026. We made the examples for learning; they are not broker recommendations.
Investor.gov · Order types (opens in a new tab)CFTC · Forex and risk (opens in a new tab)FINRA · Day trading risks (opens in a new tab)