#RiskRewardRatio The risk-reward ratio is a key concept in smart investing and trading. It measures how much potential profit you can earn for every dollar you risk. For example, a 1:3 ratio means you're risking $1 to potentially gain $3. This helps you evaluate if a trade is worth taking. A good risk-reward ratio doesn't guarantee success, but it helps you manage losses and aim for consistent gains over time. Successful traders focus on setups with favorable ratios to build long-term profitability. By understanding and applying the risk-reward principle, you can make more strategic, disciplined, and confident investment decisions.