I'm learning how to do a Risk/Reward ratio and want to make sure I am calculating this correctly.
Let's start with a .92 per share of 500 shares purchase = $460.
I expect the stock to increase by .08 so I multiply this by 500 shares = $40.
$40/500 = .08:1 if I let my investment run down to $0
I set a stop-loss of .88 per share X 500 shares = $440. Now I take total stop loss and divide by the profit.
$440/40 = 11
This means a risk/reward of 11:1
Is this correct?