#RiskRewardRatio

The risk-reward ratio helps evaluate potential profit vs. loss in trading and investing.

Key Points

1. *Risk Tolerance*: Adjust ratio based on your risk tolerance.

2. *Investment Goals*: Align ratio with goals, such as long-term growth or income.

3. *Market Conditions*: Consider market volatility and trends.

Example

A 1:2 risk-reward ratio means risking $1 to potentially gain $2. This ratio informs trading and investment decisions.