How DO I make a Risk an Reward Ratios On My Trades: 

My sample trade How To Calculate Risk reward Ratios:
1st_entry:

- I made a caluculations on My trade with My Trade range Area ( MY Strategy) the Exit Traget, Stop Loss, etc:

A widely used ratio in options trading representing the expected reward per unit risk in an options trade.
Reward Risk Ratio, or sometimes known as Risk Reward Ratio, measures the amount of reward expected for every dollar risked. In fact, calculating reward risk ratio is an exercise undertaken by investment professionals around the world for every kind of trading where money and risk is involved. Reward risk ratio is calculated not only for options trading but also for stock trading, futures trading, forex trading etc. Calculating reward risk ratio is especially useful in options trading where the complexity of a position may make the relationship between risk and reward less obvious than in stock trading or futures trading.

This tutorial shall cover how to calculate reward risk ratio in options trading, why reward risk ratio is particularly interesting in options trading and how to use reward risk ratio in conjunction with your everyday trading.
Risk is a part of trading. Every trade carries a certain level of risk. Every trader must know the amount of risk that is being assumed on each trade. Knowing the amount of risk on each trade is one way to limit it and to protect your trading account. The best way to know your risk is to determine the risk-reward ratio. It is one of the most effective risk management tools used in trading.
The risk-reward ratio is a parameter that helps a trader to determine the level of risk in a trade. It shows how much a trader is risking versus the potential reward (or profit) on a trade. While this may seem simplistic, many traders neglect taking this step and often find that their losses are very large.

How to Determine the Risk-Reward Ratio?

The first step is to determine the amount of risk. This can be determined by the amount of money needed to enter the trade. The cost of the currency multiplied times the number of lots will help the trader to know how much money is actually at risk in the trade. The first number in the ratio is the amount of risk in the trade.
The reward is the gain in the currency price that the trader is hoping to earn from the currency price movement. This gain multiplied times the number of lots traded is the potential reward. The second number in the ratio is the potential reward (or profit) of the trade.
Examples
Here are a few examples of the risk-reward ratio:

• If the risk is $200 and the reward is $400, then the risk-reward ratio is 200:400 or 1:2.
  
• If the risk is $500 and the reward it $1,500, then the risk-reward ratio is 500:1500 or 1:3.
  
• If the risk is $1,000 and the reward is $500, then the risk-reward ratio is 1000:500 or 2:1.
  

What is a Good Risk-Reward Ratio?

The minimum risk-reward ratio for a Forex trade is 1:2. However, a larger ratio is better. An acceptable risk-reward ratio for beginning traders is 1:3. Any number below 1:3 is too risky so the trade should be avoided. Never enter a trade in which the risk-reward ratio is 1:1 or the risk outweighs the reward.
Many experienced trader will only enter trades in which the risk-reward ratio is 1:5 or higher. This requires that the trader wait for a trade with this ratio, but the reward is worth it. A higher risk-reward ratio is a good idea in case the currency does not make the anticipated price movement. However, if the trader uses a lower risk-reward ratio, there is very little room for smaller price movements and the amount of risk will increase.
The risk-reward ratio is an important risk management and trading tool. It is important for beginning traders to take the extra time to perform this task because it can help to minimize risk in every trade. Waiting for the right risk-reward ratio can take a long time. However, the benefits of waiting for a higher risk-reward ratio are worth the effort and patience. You will know your risk and know your potential profit. Most importantly, you will know whether the trade is worthy of your money.

What is a Risk Reward Ratio?

The risk reward ratio is simply a calculation of how much you are willing to risk in a trade, versus how much you plan to aim for as a profit target. To keep it simple, if you were making a trade and you only wanted to set your stop loss at 5 pips and set your take profit at 20 pips, your risk reward ratio would be 5:20 or 1:4. You are risking 5 pips for the chance to gain 20 pips.

How to use a risk reward ratio in forex trading

The basic theory for risk reward ratio is to look for opportunities where the reward outweighs the risk. The greater the possible rewards, the more failed trades your account can with stand at a time. Think of it this way, if you were to use the example above and have a successful trade, it would buffer you against 4 losing trades with the same ratio. The idea of using a good risk reward ratio is to put the odds in your favor. If you consistently did the 5:20 ratio, you could lose on half of your trades, and still make a decent profit.

What types of risk reward ratio should a trader use?

The type of risk reward ratio that traders should use really depends on the type of trader you are, and the market conditions. It would be ideal if you could always find trades that had high rewards and low risk, but what you might find in reality could be very different.
It's generally frowned on to have a risk that is larger than the reward, but if markets are volatile, it might make sense. The point of having a stop loss is not only to protect capital, but also to stop your trade once it no longer makes sense. Sometimes the point where the trade stops making any sense is much farther from the opening market price than the safe exit.
When it comes down to it, it is up to you as a trader to figure out what type of risk reward ratio you want to use. You should try to avoid having your risk be bigger than your reward, particularly if you are a beginner, but there is no particular ratio that works for all traders. The important thing is that you use a ratio that makes sense for your trading style and for market conditions.

Is Reward Risk Ratio and Risk Reward Ratio The Same Thing?

Incredibly, many investment advisers around the world tend to mix these two up and use them interchangably. In fact, many investment advisers would quote a reward risk ratio and call it a risk reward ratio. Yes, you must have heard options gurus say things like "You can have a 2:1 risk reward ratio using so-and-so-spread to put the odds in your favor". Well, you would know how laughable that statement is after learning about the difference between reward risk ratio and risk reward ratio.

Reward risk ratio is dividing the expected maximum profit of a trade by the expected maximum loss while risk reward ratio is the reverse, dividing expected maximum loss by the expected maximum profit. This means that a reward risk ratio produces a positive number when the potential reward exceeds the potential risk while a risk reward ratio produces a positive number when the potential risk exceeds the potential gains. This is the difference that made the above "guru statement" so funny. How can a risk reward ratio of 2:1, meaning you are risking $2 in order to make $1, be putting the odds in your favor? Yes, to this day, many investors and educators still quote reward risk ratios and call them risk reward ratio.

In options trading, we tend to stick to the reward risk ratio because it produces a number which tells us that a trade is favorable the more positive the number is.

Remember, always use the Calculating Reward Risk Ratio order when closing your naked put or call write position

Why is Calculating Reward Risk Ratio So Meaningful In Options Trading?

Calculating reward risk ratio is especially meaningful in options trading because stock options by its very nature is a convex trading instrument. A trading instrument that has convexity is a trading instrument that produces a higher potential gain than potential risk. For instance, when you buy a call option, your maximum loss is merely the amount you paid for the option, nothing more, while you stand to gain as much as the underlying stock rises, which can be many times the amount you paid for the options itself. That's convexity. Convexity prevails in many options strategies as well. For instance, most ratio spreads and bullish options strategies produces a reward risk ratio of at least 2 : 1. In fact, most options traders won't trade a position with reward risk ratio lesser than that. Indeed, 2:1 is a popular reward risk ratio that options traders use while some aggressive options traders won't trade for lesser than 4:1.

Purpose of Calculating Reward Risk Ratio in Options Trading

Calculating reward risk ratio is an exercise most serious or professional options traders do BEFORE executing a trade. Yes, this is an exercise you do before actually trading an options strategy in order to help you make a better investment decision. In fact, you would be surprised sometimes to see that the reward risk ratios of some strategies that "feels good" are actually quite unfavorable when you work out the math. Calculating the reward risk ratio of an options trade you are about to make before making it helps you avoid potentially unprofitable trades that are not immediately obvious. Many options traders also make it a policy to only trade when certain reward risk ratio has been met. Options traders with a 4:1 trading policy would work out the reward risk ratio before making a trade and makes that trade only when the reward risk ratio requirement is met in order to maximise return on investment. Yes, having a high reward risk ratio is a characteristic of options trading due to its nature as a leverage instrument.

Calculating Reward Risk Ratio

Calculating reward risk ratio for options trading is especially easy as most options strategies have pre-defined maximum profit and loss points. In fact, if you look through the options strategies tutorials here at Optiontradingpedia.com, you would see that we have included calculations for their maximum profit and loss points as well. Those are the numbers you use in calculating reward risk ratio for an options strategy you are able to execute. What you do is simply divide the maximum potential profit against the maximum potential loss to arrive at the reward risk ratio.

Calculating Reward Risk Ratio Example :

A bull call spread bounded by the strike prices $10 and $15, costs $1.50 to put on. Its maximum potential profit is $3.50 ($5 - $1.50) when the stock closes at or above $15 upon expiration and its maximum potential loss is the amount you paid for it, which is $1.50. Its reward risk ratio is:

Reward Risk Ratio = 3.50 / 1.50 = 2.3

Which means that this bull call spread has a reward risk ratio of 2.3:1.