#RiskRewardRatio

Understanding the risk-reward ratio is crucial for every trader. It helps you evaluate whether a trade is worth taking based on potential profit compared to potential loss. For example, if you're risking $100 to potentially gain $300, your risk-reward ratio is 1:3 — a favorable trade. Many successful traders aim for a minimum of 1:2 or 1:3, depending on their strategy. A strong risk-reward ratio allows you to be profitable even if not all your trades win. It's not just about how often you're right — it's about how much you make when you're right versus how much you lose when you're wrong. Master this concept and you'll have a powerful edge in the markets.