The idea is that you should never take a trade unless you are expecting an upward move that is at least three times (or four times, or ten times ... whatever) the downside potential.

It is certainly a fine idea, an excellent idea. In fact, in light of what I've just been saying about risk of ruin and the whole concept of needing big wins to offset lots of small losses, it would seem to be a perfectly fine strategy.

Yep, sure is. I also advise you while you are at it to buy low, sell high, and make a good profit.

Great advice, I hear applause from the peanut gallery and smile to myself when an associate tells me that tape sales at the back of the auditorium are going very well.

Jeeze, I hear snickers, somebody saying I'm being sarcastic again. Oh well.

Playing devil's advocate for a while here, please know that I am right with you on this risk to reward thing and agree completely, but bear with me for a while please.

How are you supposed to know the extent of the moves? This is forecasting, and most traders of any experience know better than that. Maybe you could look at Fibonacci retracements, maybe Elliott Wave, Support and Resistance, Trend Lines....

The whole concept of a "risk to reward ratio" is silly. It implies that you can call the market and have some clear idea about the extent of a move. Maybe you might have some idea, but it would be impossible to really quantify. In all probability you will be wrong more often than you are right and a money management strategy has to take this into account.

Gann is probably an outright scam, which unfortunately has outlived the original scammer. Fibonacci is unreliable, at best. Elliott Wave is certainly interesting and is definitely a tool that is supposed to provide risk:reward type info, but the great bulk of investors would rate Elliott Wave right up there with tea leaves and random rolls of the dice as far as actual stock picking ability is concerned. Then we get to support and resistance, this is undoubtedly the cop of the investment world, never around when you need it!

The idea of a risk:reward ratio is roughly as useful as the advice "buy low, sell high". Easy to say, hard to execute, and certainly gives no information about how you would achieve this feat. If a text spends a lot of time admonishing you to only take trades with a suitably high risk to reward ratio, examine what else he says very carefully. Unless he packages this with significant information about forecasting moves you are likely to be listening merely to another one of those pathetic wannabes rolling out standard trading cliches and packaging this as "new" material.