#RiskRewardRatio The Risk-Reward Ratio is a key concept every trader must understand to manage their trades effectively. It compares the potential loss (risk) to the potential profit (reward) of a trade.

For example, if you're risking $100 to potentially earn $300, your risk-reward ratio is 1:3. This means for every $1 you risk, you aim to make $3.

A good trading strategy often targets a minimum 1:2 or 1:3 ratio. This allows traders to be profitable even if they lose more trades than they win, as the profits from the winning trades outweigh the losses.

Key Tips:

Always plan your entry, stop-loss, and take-profit levels before entering a trade.

Never risk more than you can afford to lose.

Combine risk-reward with proper risk management for long-term success.

In short, mastering the risk-reward ratio helps you trade smarter, not harder.