#RiskRewardRatio
Here's information about risk-reward ratio in 100 words:
Risk-Reward Ratio
The risk-reward ratio is a measure of potential profit versus potential loss. It's calculated by dividing the potential profit by the potential loss.
Key Points
1. *Evaluate trades*: Assess potential risk and reward before entering a trade.
2. *Set targets*: Determine profit targets and stop-loss levels.
3. *Manage risk*: Adjust position sizes based on risk tolerance.
A favorable risk-reward ratio can help traders make informed decisions and manage risk effectively. A common ratio is 1:2 or higher, meaning potential reward is twice the potential risk.
