#RiskRewardRatio The risk-reward ratio measures potential loss vs. potential gain in a trade. It's calculated like this:

Risk-Reward Ratio = (Potential Loss) / (Potential Profit)

Example:

If you risk $100 to potentially gain $300, the ratio is 1:3 — meaning for every $1 you risk, you aim to earn $3.

Why it matters:

A good ratio helps manage losses over time.

Many traders aim for 1:2 or better.

Even with 50% win rate, a positive ratio can keep you profitable.

Use it with stop-loss and take-profit levels for smarter trading decisions.