#RiskRewardRatio
The risk/reward ratio is one of the most powerful tools in a trader’s arsenal. It measures how much a trader stands to gain for every dollar risked. A 1:3 ratio, for example, means risking $100 to potentially make $300. The key is not just having a good win rate but ensuring your winning trades significantly outweigh your losing ones. This concept allows traders to stay profitable even if they lose more trades than they win. Consistently applying favorable risk/reward setups helps build discipline and sustainability. Make sure you’re not chasing trades with poor reward potential—calculate your edge first.
