Risk-reward

Risk-reward describes the balance between how much an investor stands to gain if an investment works out against how much they stand to lose if it does not. An investment is described as having an asymmetric risk-reward, or asymmetric upside, when the potential gain is meaningfully larger than the potential loss.

Investors generally look for situations with favorable, asymmetric risk-reward rather than simply chasing the highest expected return, since a position with limited realistic downside and substantial potential upside can be attractive even if the probability of success is not particularly high.