#RiskRewardRatio The Risk-Reward Ratio (RRR) is a key concept in investing and trading, used to assess potential profit versus potential loss. It compares the amount of risk taken on a trade to the potential reward. For example, a 1:3 RRR means risking $1 to potentially gain $3. Traders use this ratio to make informed decisions and manage their capital effectively. A favorable RRR helps ensure long-term profitability, even with a lower win rate. It encourages discipline and strategic planning, especially when combined with stop-loss and take-profit orders. However, relying solely on RRR without considering market conditions or trade quality can be misleading. Therefore, it should be used alongside other analysis tools for the best results.