Risk-reward ratio
The risk-reward ratio compares what you lose if the stop is hit with what you gain at target: risking ₹1,000 to make ₹3,000 is 1:3. Alone it means nothing; with a win rate it becomes expectancy. The Druckenmiller framework is the concentrated version.
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In the help centreSee how leverage and margin work on MochatradeRelated terms
- ExpectancyExpectancy is the average result per trade: win rate times average win minus loss rate times average loss, usually…
- Kelly criterionThe Kelly criterion is the bet size that maximises long-run growth given your edge and odds. Bet above it and growth…
- Call optionA call option is the right to buy at the strike before expiry. Strike 24,200 and premium 80 means profit only above…
- Leverage ratioThe leverage ratio is position value divided by margin: ₹50,000 on ₹10,000 is 5x. One over the ratio is how far the…
- Negative balance protectionNegative balance protection means you cannot lose more than the money in your account, even when a gap jumps past your…
- Price-to-sales ratioThe price-to-sales ratio is market value divided by annual revenue, used for companies with no profit yet, where P/E…
Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.