#RiskRewardRatio A trader decides to go long at $1,000. They believe that the cryptocurrency will increase in value, and they set a profit target of $1,500. However, the cryptocurrency market is highly volatile, so the trader sets a stop loss at $900 to limit their losses.

In this scenario, the RR ratio would be 1:5 ($100 loss / $500 return). This means that the trader stands to make 0.5 times their initial investment if the market moves in their favour. However, the possible loss is also significant, with the trader standing to lose $100 for every $1,000 invested.