#RiskRewardRatio RISK-REWARD RATIO: THE KEY TO SMART TRADING
The Risk-Reward Ratio (RRR) is a powerful concept every trader must understand before placing any trade on Binance. It compares the potential loss (risk) to the potential gain (reward) of a trade. A common ratio is 1:2, meaning you're risking $1 to potentially earn $2. Smart traders always seek a positive RRR, as it ensures long-term profitability—even if only half the trades succeed. For example, if you win 5 out of 10 trades with a 1:2 ratio, you’re still in profit. Use Stop-Loss and Take-Profit orders to manage your RRR effectively. Mastering this ratio separates emotional trading from strategic success.