Controlled risk is a term used in trading to describe a strategy or approach to managing risk. It involves setting limits on the amount of potential loss that could be incurred in a trade or investment, either through the use of stop-loss orders or other risk management tools. By controlling the risk, traders and investors can minimize the impact of adverse market movements on their portfolios and protect their capital. The goal of controlled risk is to balance the potential rewards of an investment against the potential risks, with the aim of achieving a favorable risk-reward ratio.