#RiskRewardRatio The Risk/Reward Ratio** (or **risk/reward ratio** in English) is a super important tool in trading. It allows you to measure **how much you risk** compared to **what you expect to earn** on a trade.

**Formula :

**#RiskRewardsRatio Risk/Reward Ratio = Potential Risk / Potential Gain**

*Why is it important?**

- Even if you only win **40% of your trades**, a good Risk/Reward (like 1:3) can make you profitable in the long run.

- It helps you to **manage your capital** and avoid making trades that are too risky for little gain.

Most professional traders look for setups with a **minimum Risk/Reward of 1:2** or **1:3**. This means that every dollar risked can earn 2 or 3 dollars.

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