#RiskRewardRatio
Do you enter a trade knowing how much you will lose if you lose? And how much you will gain if you win?
If not... then you are trading blindly!
The Risk/Reward Ratio is one of the most important secrets of professional traders and investors.
It is simply: "How much are you willing to lose compared to how much do you expect to gain?"
Example:
• You enter a trade with a risk of 10 dollars
• You expect to gain 30 dollars from it
• The ratio = 1:3 (Risk 1 compared to Reward 3)
Why is it important?
• Even if you lose multiple times, you can still end up profitable
• It helps you choose the right trades, not just any opportunity that comes your way
• It helps you build a realistic and studied trading plan
The best traders look for ratios of 1:2 or 1:3 and higher.
This means that even if only 40% of their trades succeed, they remain profitable!
In summary:
Before entering any trade, ask yourself:
"Is the risk worth it? Or is it just impulsive?"
Calculate it right... and trade with your mind, not with your emotions.
