#RiskRewardRatio

The risk-reward ratio is a key concept in trading and investing, helping you evaluate potential trades or investments. Here's how it works:

What is Risk-Reward Ratio?

The risk-reward ratio compares the potential profit (reward) to the potential loss (risk) of a trade or investment.

How to Calculate Risk-Reward Ratio

1. *Identify Potential Profit (Reward)*: Determine the potential profit target.

2. *Identify Potential Loss (Risk)*: Determine the potential loss or stop-loss level.

3. *Calculate Risk-Reward Ratio*: Divide the potential profit by the potential loss.

Example: If the potential profit is $100 and the potential loss is $50, the risk-reward ratio is 2:1.

Interpreting Risk-Reward Ratio

1.