Risk/Reward: The Heart of Profitable Trading

• The risk/reward ratio indicates how much you risk compared to the potential gain. A solid setup typically offers at least 1:2 or 1:3.

• Risk = stop-loss level at which the trade is invalidated.

• Reward = target where the price is likely to go if the trade works.

• The higher the reward compared to the risk, the lower your win rate needs to be to remain profitable.

• Trailing stops help capture larger moves, but you won't exit at the top.

• Be impatient with losers and patient with winners.

• Example: Buy 100 shares at $100, stop-loss at $97, target at $109 $ :

• Risk = $300, Reward = $900 $ → Ratio 1:3

• Break-even win rate = 25%

Mastering risk/reward is essential - cut losses quickly, let profits run.#Binance #TradingCommunity