What is the Risk-Reward Ratio?

CategoryMoney Notes

What's a positive expectancy?
We gamble, win 100,000 with a 30% chance. 100,000 times 30%, the mathematical expectation is 30,000.
We lose 200,000 with a 70% chance. 200,000 times 70%, the mathematical expectation is negative 140,000.
If we gamble like this every time, in the long run, we average a loss of 110,000 per game.
This is called a negative expectancy.#summary The shorter the cycle, the greater the win rate, the faster the profits.

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