From Traderpedia

Definition: In any kind of trading, risk can be defined as the probability or possibility of loss of trading capital. Risk is measured in terms of probablity & quantity of exposure to loss.

The probability of financial consequences, or monetary losses resulting from a financial transaction. The combination of the probability of occurrence and the resulting consequence of a specified undesirable financial event.

A high risk investment may stand to delivery high rewards, but also a high possibility of large losses. A low risk investment may deliver small rewards, but also small or no risk of losing any money at all (ie: a bank account).

[edit] See also

• reward-to-risk ratio