Risk Reward Ratio #RiskRewardRatio #Risk Reward Ratio Potential Risk: Reward = (Risk-Reward Ratio)
In Arabic: You ask yourself, "How much could I lose if the trade fails, and how much could I earn if it succeeds?"
Quick Example
You enter a trade and risk $100.
Profit Target = $300.
1:3 So the ratio = 100:300 or
Why is it important?
If you maintain a positive risk-reward ratio (for example, 1:2 or 1:3), even if you lose more than you win, you will still
be making profits over time.
A ratio less than 1:1 means you are risking more than you could possibly
gain, and that is very dangerous.
:CryptoTariffDrop# Related to
Since fees are decreasing, the cost of entering and exiting a
trade becomes lower - thus automatically improving the
Risk-Reward Ratio for small or quick trades.
Meaning: Your chance to earn more for a slightly lower risk.
Summary Quick Tip
Do not enter a trade unless the profit-to-loss ratio is
reasonable (preferably 1:2 or more).
Always think: "Is this risk worth it?"
"Smart Risk" Strategy
1. Define a clear entry zone
Do not enter randomly!
Wait for the price to reach a strong support area if you are buying or a strong resistance area (if you are selling).
2. Set a close and logical Stop Loss:
Place the stop loss order just below support or just above resistance (for example, 1-2% away from the entry).
3. Set a profit target that is double
The target should be at least double the distance from the stop loss.