Quantify your risk is indeed very difficult. There are many factors that have influence on your risk: product traded leverage average profit average loss stops do you always follow your rules for 100% can you be concentrated from start till finish can you get emotional or panic etc... The best way to calculate your risk is to take your trackrecord and use that as in your real trading all the factors that have impact are present in a real situation. Theoretical risk reward calculations are not reliable as you can never correctly calculate the impact of every factor. Theoretical calculations always assume you do what you have to do when you have to do it. Reality is almost never like that.
Taking historical risk reward is still theoretical. Past performance disclaimer. Too many factors can effect your plan but you have to start somewhere. Better than have no plan at all. It is called discipline. Successful trades don't always have a good outcome.
In your historical risk reward are the most difficult factors to calculate incorporated. You can at least see how you handle in reality respecting stops, following the rules, concentration, emotions... So the non mathematical things. Discipline is where most people have problems with, I think. Unless you are fully automated.
Once you get comfortable with taking losses it doesn't become such a problem. You know you are going to get whipsawed. If you take small losses the trade may recover right after you close your position. Or maybe it won't. If you take small losses you won't take big losses. I know; death by 1000 cuts; but if your system has a positive expectancy with a decent risk/reward ratio you will eventually come out on top. You have to trust your system.
You are faced with the two options: Lose $10000 with a probability of 0.02 Lose $420 with a probability of 0.5 Which one would you choose? Which is more important: risk or perception of risk?
Everyone faces some risk while trading, but those who succeed at handling it well, get success in long term here.
For me, risk means a way to improve my trading. It is obvious that I may face risk somewhere, this will help me in ensuring that whether I am on the right path or not.