#RiskRewardRatio Understanding Risk-Reward Ratio

The Risk-Reward Ratio (RRR) is a key concept in trading that helps manage potential profits and losses. It compares how much a trader is willing to risk on a trade to how much they expect to gain. For example, a 1:3 ratio means risking $1 to potentially earn $3. A good RRR helps traders stay profitable even if some trades fail. It encourages smart planning and avoids emotional decisions. By using stop-loss and take-profit levels, traders can better control outcomes. The ideal ratio varies by strategy, but aiming for a positive RRR improves long-term success. It's a simple yet powerful tool for consistent and disciplined trading.