#RiskRewardRatio The Risk-Reward Ratio is a fundamental tool for assessing the relationship between the risk taken and the expected reward in an investment. Its correct application allows for strategic decision-making, minimizing losses while optimizing profits.

Example 1: Entry and exit strategy

An investor analyzes a possible trade with Bitcoin and defines their entry and exit levels:

- Decides to enter when detecting a consolidation trend in BTC.

- Sets an exit point based on a key resistance level.

- Establishes a protection level to limit losses if the price drops unexpectedly.

Here, the Risk-Reward Ratio helps measure whether the potential benefit justifies the risk taken before taking action.

Example 2: Use of stop-loss and take-profit

A trader who follows the market daily adjusts their strategy with risk management tools:

- Defines a *stop-loss* to avoid larger losses if the market turns negative.

- Sets a *take-profit* at a strategic level to secure profits in case of a favorable movement.

This approach allows for maintaining control over risk without relying on uncertain predictions.

Example 3: Smart diversification:

An investor builds their portfolio with various assets, reducing their exposure to the volatility of a single market. Evaluates different options with varying risk-reward ratios and strategically distributes their investment.

The *Risk-Reward Ratio not only protects capital but also enables more informed decisions in volatility scenarios. Its proper use turns uncertainty into strategy, facilitating more effective risk management.