#RiskRewardRatio The risk-reward ratio is a key tool in trading that allows you to assess whether a trade is worth it. It is calculated by dividing the potential loss by the potential gain. For example, if you are willing to lose 100 to gain 300, the ratio is 1:3. This means that for every dollar risked, you can earn three. Good risk management recommends trading with a minimum ratio of 1:2, which improves long-term profitability, even if several trades result in a loss. Emotional control and discipline are essential when applying this principle.