#RiskRewardRatio In my trading strategy, the risk-reward ratio is non-negotiable. I won’t take a trade unless I see at least a 1:2 ratio, though I aim for 1:3 or higher when the setup is strong.
How I use it:
I first identify potential entry and exit points using support/resistance zones and trendlines.
Then I set my stop-loss just beyond a key level, and only proceed if my potential reward is at least double that distance.
I also use the ATR (Average True Range) to gauge realistic price movement and fine-tune my stop-loss/profit targets.
Example: Just last month, I skipped a trade with a tempting setup because the risk-reward was 1:1.2. Turned out to be a fakeout. That saved me a loss and kept my win-rate cleaner.
Focusing on solid risk-reward setups has made me more disciplined and selective, which has significantly improved my overall returns.
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