#RiskRewardRatio

The risk reward ratio is a calculation traders use to assess the potential return of an investment compared to its risk. It’s calculated by dividing the amount of profit expected by the amount of potential loss. For example, if a trade offers a possible gain of 60 dollars and a possible loss of 20 dollars, the risk reward ratio is 3 to 1. This means for every dollar you risk, you can make three dollars. Successful traders often aim for high risk reward ratios to ensure long-term profitability. A good ratio also helps decide which trades are worth taking and which ones are not