Asymmetric Risk Reward Ratio
An Asymmetric Risk Reward ratio is an imbalance between the risk and the reward. The preferred asymmetric risk-reward is positive, which means less risk, more reward.
Asymmetric Risk Reward ratio can mean either an investment portfolio position that is being planned out to have an asymmetric risk reward setup, or it can refer to the Asymmetric Risk Reward ratio of a closed position that has already been bought and sold.
To calculate Asymmetric Risk Reward ratio, we divide the profit taken (or expected) by the risk taken to achieve it. For example, if we earned a $100,000 profit on position with $50,000 at risk, the asymmetric risk reward ratio was 2. The profit was 2 times more than we risked.
For more information, see:
Asymmetric Return Distribution