#RiskRewardRatio

- **Concept:** The **Risk/Reward** ratio compares the potential loss to the expected return in any trade.

- **Formula:**

**R:R = (Target Price - Entry Price) ÷ (Entry Price - Stop Loss Price)**

- **Ideal Level:** It is preferable to be **1:2** or higher (Risk 1$ for a minimum profit of 2$ ).

- **Usage:**

- Analyzing the feasibility of the trade before entering.

- Smart capital management (avoiding trades with minimal returns against high risks).

- **Example:** If the **Stop Loss = $90** and **Take Profit = $120** when entering the trade at **$100**, the ratio would be **1:2**.

*Reminder:* Even with a good ratio, the **probability of trade success** and capital management strategy should be considered!