#BinanceSafetyInsights

The **Risk-Reward Ratio (RRR)** is a metric used in trading and investing to compare the potential profit of a trade to its potential loss. It helps you assess whether a trade is worth taking based on how much you’re willing to risk versus how much you stand to gain.

### Formula:

**Risk-Reward Ratio = Potential Loss / Potential Gain**

### Example:

Let’s say:

- You’re willing to risk **$100** (the amount you might lose),

- For a potential gain of **$300** (the profit target).

Then:

**Risk-Reward Ratio = 100 / 300 = 1:3**

This means you're risking $1 to potentially make $3.

### Why it matters:

- A **lower** RRR (like 1:3) is generally more favorable, as it implies higher potential reward compared to risk.

- It helps you stay consistent and disciplined in your strategy, avoiding bad trades even if they feel tempting.

Do you want to see how to apply it to a specific trade or investment?