#RiskRewardRatio
Understanding the risk-reward ratio is one of the most important aspects of successful trading. This ratio helps traders evaluate the potential profit of a trade compared to the possible loss. For example, a 1:3 risk-reward ratio means you’re risking $1 to potentially make $3. Smart traders always aim for a favorable ratio before entering a trade. It allows better decision-making and helps protect your capital in the long run. Never enter a trade blindly—calculate your entry, stop-loss, and take-profit levels. This discipline can turn a losing strategy into a profitable one over time.