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Risk-Reward vs. Profit Factor: Why Understanding the Difference Is Huge A lot of traders throw around terms like “risk-reward ratio” and “profit factor” like they’re interchangeable, but they’re not. Understanding the distinction is key to evaluating a strategy’s true performance and managing expectations — especially during inevitable drawdowns. Risk-Reward vs. Profit Factor The risk-reward ratio measures how much a trade stands to gain versus how much is at risk. If you’re risking $100 to make $600, your risk-reward ratio is 1:6. Sounds great, right? But that number alone doesn’t tell the whole story. Profit factor, on the other hand, is a broader measure of a strategy’s overall performance. It’s calculated by dividing the total profits by the total losses over a given period. A profit factor of 4.8, for example, means that for every $1 lost, the strategy has historically made $4.80. Yes, Even When Markets Are Closed… The funny thing about Friday’s close is that the market doesn't just shut down until Monday... That would cripple our modern money system. Even with the markets “closed,” over-the-counter transactions still happen to keep our money system from going off the rails. And that's how you end up with gaps on the charts when the market opens on Monday... Which is why it's 100% possible to target income from the stock market over the weekend. As a matter of fact, I’ve discovered a straightforward way to do just that! It's all thanks to what you'll find in this document. ![]() This is a detailed plan of action to take for income over the weekend. And if you go here now, you'll access a video broadcast where I explain exactly how it works. From what you'll find there… Anyone with a regular brokerage account can now target extra income over the weekend right from their cell phone or computer! I can't guarantee future returns of course… But with this new blueprint, new income doors might just have opened up for us in 2025. Kane Shieh Kane Shieh Trading Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. |
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