what does the risk reward ratio tell you 
the risk reward ratio helps investors manage their risk of losing money on trades even if a trader has some profitable trades they will lose money over time if their win rate is below 50 the risk reward ratio measures the difference between a trade entry point to a stop loss and a sell or take profit order comparing these two provides the ratio of profit to loss or reward to risk investors often use stop loss orders when trading individual stocks to help minimize losses and directly manage their investments with a risk reward focus a stop loss order is a trading trigger placed on a stock that automates the selling of the stock from a portfolio if the stock reaches a specified low investors can automatically set stop loss orders through brokerage accounts and typically do not require exorbitant additional trading costs 