#RiskRewardRatio

Great question. In crypto (and investing in general), the Risk-Reward Ratio (RRR) helps you measure how much risk you're taking for the potential reward. It's super useful for deciding if a trade is worth it.

Formula:

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

Example in Crypto:

Say you’re buying Bitcoin at $60,000.

Stop-loss (your risk): $55,000 → You risk losing $5,000.

Target profit: $70,000 → You aim to gain $10,000.

RRR = \frac{5,000}{10,000} = 1:2

This means you're risking 1 to potentially make 2. That's generally a good setup.

What’s a Good Ratio?

1:2 or higher is ideal (risking 1 to make 2+).

Some aggressive traders go for 1:1.5, but below that you need a very high win rate to stay profitable.

Why It Matters in Crypto

Crypto is volatile, so managing risk is crucial. Even with 50% win rate, you can still make money if your winners are bigger than your losers.

Want a risk-reward calculator or to break it down for a trade you’re planning?