RISK REWARD RATIO INDICATOR



Investment in the capital markets is risky. Some of transactions are closing with loss, so very important thing is to controlling risk. There are many tools for risk controlling. One of them is Risk Reward Ratio indicator.

It is used by many investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns. This ratio is calculated mathematically by dividing the amount he or she stands to lose if the price moves in the unexpected direction (i.e. the risk) by the amount of profit the trader expects to have made when the position is closed (i.e. the reward).

Using this indicator, you can check, how much you are risk relative to the profit you can get. If you are always place orders in market with Risk Reward Ration higher than 2 than if you have min. 50% of accurate orders, than your account balance will systematically grow.

For example:

For 10 transactions, we have 5 profitable transaction and 5 lossy transactions (50% of efficiency).

If we set Risk Reward Ratio = 2, in this 10 transactions, we will loss e.g. $250 ($50 per trade) and we will earn $500 ($100 per trade), so our account will increase by $250.

If we set Risk Reward Ration = 3, in this 10 transactions, we will loss e.g. $500 ($100 per trade) and we will earn $1500 ($300 per trade), so our account will increase by $1000.

How to use Risk Reward Ratio Indicator

Using Risk Reward Ratio indicator, you can simply control your current orders and future orders by setting Stop Loss and Take Profit in appropriate distance to open price.


To draw Open, Stop and Target lines, you should click on Draw RiskRewardRatio button and than click on chart in place where you want to place Open line. Each line you can select by double clicking and move in any direction. When you are moving lines, indicator constantly updating values at lines.

You can also put indicators line on opened position or placed pending order to read its risk to reward ratio.

Download

Indicator is available in two versions, for MetaTrader 4 and for MetaTrader 5:



You can also check demo version for EURUSD pair:




There are available scripts allowing placing orders:

Risk Reward Ratio Pending Order Sender - MT4
Script to place pending orders based on Risk Reward Ration indicator lines - version for MetaTrader4.DOWNLOAD
Risk Reward Ratio Order Sender - MT4
Script to open market orders with stop loss and take profit distance set by Risk Reward Ratio indicator lines - version for MetaTrader4.DOWNLOAD
Risk Reward Ratio Pending Order Sender - MT5
Script to place pending orders based on Risk Reward Ration indicator lines - version for MetaTrader5.DOWNLOAD
User Manual
Detailed user guide for Risk Reward Ratio IndicatorDOWNLOAD