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I use a dictionary definition of risk: (which is what stevo also used from memory)

Risk = Probability of an event occuring

Now that 'event' could be anything you like....ie....a share price continuing in the direction one currently interprets it to be heading. 

So in a simplistic case, if you find from your paper trading or whatever simulation technique you use, that given your predetermined entry signals being met (from chart patterns, indicators or whatever) the share price continues to rise on at least the next day 75 times out of a hundred then your entry criteria being met on any single occasion will have a 75% probability of giving a profitable trade for the next day in the future.  So in this simplistic example the risk of successful trade is 75% and the risk of a failed trade is 25% imo.

I agree with you that assigning probability is information based but then so will everyone else who studied calculating probability in Applied Mathematics back in Forms 5 & 6 in high school. (which is a very long time ago for me now   )

eg......even in the case of tossing a coin with 2 possible outcomes you might find that if the coin is unevenly weighted that heads might come up say 600 times out of 1000 and so for that coin the probability of head on a single toss would be 60%.  But had the frequency of the possible outcomes for the coin been evenly distributed then obviously the probability of a head would be 50%

And scratching my head trying to remember all this stuff, I recall there are different types of distributions that occur in nature for different types of events....ie.....normal, binomial, poisson and hypergeometric distributions are some I can remember - there may be more for all I know atm

The probability of a single event occuring in nature, investing or whatever will be determined by which of the above distributions you apply to the frequency of all the possible outcomes.

So this is where I imagine calculating 'investment/trading' risks becomes hairy and involves some serious number crunching and there is plenty of info on this on the www as I mentioned in an earlier post.

So unless you have software with sufficient grunt to calculate these risks for you under different scenarios/environments the vast majority of traders are left with paper trading and documenting the results until the distribution of the possible outcomes is determined in order to then asses the probability of the trading plan succeeding in the long run.  Obviously the more data you get from paper trading the more accurate will be the plan's probability of success - but then you can't paper trade forever either

hope this helps

bullmarket

ps....I doubt I will be around tomorrow, so I'll pop in later this week if anyone wants to discuss further......have a good evening