#RiskRewardRatio
The Risk-Reward Ratio is a crucial metric in trading and investing that compares the potential profit of a trade to its potential loss. It's calculated by dividing the amount you risk by the potential reward. A lower ratio (e.g., 1:2 or 1:3) is generally preferred, indicating that the potential gain outweighs the risk. This helps investors make informed decisions by assessing the profitability relative to the risk taken, aiming for favorable outcomes in the long run.
