#RiskRewardRatio #RiskRewardRatio #RiskRewardRatio Risk-Reward Ratio (RRR) is a key concept in trading and investing that helps you evaluate the potential return of an investment relative to its risk. Here's a quick breakdown:

What is Risk-Reward Ratio?

It compares how much you’re risking to how much you could gain:

Formula:

\text{Risk-Reward Ratio} = \frac{\text{Potential Loss}}{\text{Potential Gain}}

Example:

If you're risking $100 to potentially gain $300, the RRR is:

\frac{100}{300} = 1:3

This means for every $1 you risk, you aim to make $3.

Why It Matters:

A lower RRR (like 1:2 or 1:3) means better reward for each dollar risked.

Helps with consistent strategy and managing losses.

Traders often aim for a minimum RRR (like 1:2) to stay profitable over time.

Want a visual chart or a few trading scenarios to understand it better?