#RiskRewardRatio The **risk-reward ratio (RRR)** is one of the most important metrics in crypto (and any trading). It helps you decide **if a trade is worth taking** based on how much you're willing to lose vs. how much you could gain.
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### **What Is the Risk-Reward Ratio?**
It compares your **potential loss (risk)** to your **potential profit (reward)**.
**Formula:**
> **Risk-Reward Ratio = Potential Loss / Potential Gain**
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### **Example:**
- You buy SOL at $100.
- You set a stop-loss at $90 (risking $10).
- You aim to sell at $130 (hoping to gain $30).
**RRR = $10 / $30 = 1:3**
This means: **You're risking $1 to possibly make $3.**
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### **Why It Matters in Crypto:**
- The market is **highly volatile**, so you need a solid edge.
- Even if you're only right 40% of the time, a **1:3 ratio** keeps you profitable over time.
- **Poor RRR (e.g., 2:1)** means you have to win more trades just to break even.
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### **General Rules:**
- **1:2 or higher** is typically considered a good RRR.
- Combine RRR with a high-probability setup (like trading breakouts or bounces from strong support).
- **Never risk more than you can afford to lose**—pair RRR with proper position sizing.
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### **Pro Tip:**
Use **risk calculators** or trading platforms with built-in tools to plan your entries, stops, and targets before entering a trade.
