What reward-to-risk ratio does a hypothetical price target imply?
Compare the target distance with the stop distance before execution. This is a gross price-distance ratio rather than a forecast of an achievable return.
Calculation and limitations
Formula: Gross reward-to-risk = target distance / stop distance.
Limitations: Spread, fees, slippage, win probability and market behavior are not included. A high reward ratio does not prove profitability.
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