#RiskRewardRatio

Key to Smart Trading

The risk-reward ratio is a crucial concept in trading and investing. It compares the potential profit of a trade to the potential loss. For example, a 1:3 ratio means risking $1 to potentially gain $3. A favorable risk-reward ratio helps traders manage risk and make informed decisions. Consistently aiming for high reward relative to risk can lead to long-term profitability, even with lower win rates. Always assess this ratio before entering a trade to ensure it aligns with your strategy. Remember, smart trading isn’t about winning every time—it’s about managing risk wisely for sustainable growth.