#RiskRewardRatio Mastering the Risk-Reward Ratio: Smarter Trades on Binance

The risk-reward ratio is a core part of my trading strategy on Binance. It helps me evaluate whether a trade is worth taking by comparing potential profit to possible loss. I typically aim for a minimum ratio of 1:2, meaning I’m risking $1 to potentially gain $2.

To calculate it, I first identify key entry, stop-loss, and take-profit levels using technical analysis. Tools like Fibonacci retracement, support/resistance zones, and the Relative Strength Index (RSI) help me spot potential setups. I then plug these numbers into a simple formula:

(Target Price – Entry Price) / (Entry Price – Stop-Loss Price).

For example, if I enter a trade at $100, with a stop-loss at $95 and a target at $110, my risk-reward ratio is 1:2.

Using this ratio consistently has kept me disciplined, helped avoid low-probability trades, and improved my overall decision-making—especially in fast-moving markets like crypto.