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Risk–reward scenario explained.

A comparison of a planned adverse outcome with a planned favorable outcome. It describes assumptions, not the probability of either outcome or a guarantee about execution.

Risk & orders

Risk–reward scenario

A comparison of a planned adverse outcome with a planned favorable outcome. It describes assumptions, not the probability of either outcome or a guarantee about execution.

Example: A hypothetical $2 loss and $4 gain create a 1:2 comparison before costs.

Watch for: Assuming an attractive ratio makes an opportunity profitable.

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