You've probably come across the risk to reward ratio rather frequently if you at least occasionally consume financial media. Some people believe the risk to reward ratio is just some random quantifiable term people throw around, whereas others think you have to apply ridiculously complex formulas to calculate it.
The truth is... you've guessed it, somewhere in the middle.
As explained in this video, the risk to reward ratio is indeed something that can be let's say "calculated" but memorizing an overly-complicated formula is not required.
From definition to "formula" and ultimately examples, this video explains everything you need to know about the risk/reward ratio and how it can be used in... real life.
There's absolutely nothing complicated about it, it's simply a useful little tool for your economic arsenal. In just one minute, you should be able to master the risk to reward ratio and figure out yourself how (or whether or not) it can be used for your own needs. Whether you think about it when trading/investing or when making an important business decision, there's most likely ample room in your life for the risk to reward ratio :)
