#RiskRewardRatio **#RiskRewardRatio** is a key concept in investing and trading that helps evaluate the potential return of an investment compared to the risk taken. It’s calculated by dividing the amount of potential profit by the amount of potential loss. For example, if you're risking $100 to potentially make $300, your risk-reward ratio is 1:3. This means for every dollar you risk, you stand to gain three. A favorable risk-reward ratio, often 1:2 or higher, helps traders and investors make smarter decisions by focusing on opportunities where the potential reward outweighs the risk. This strategy encourages disciplined trading and helps avoid emotionally driven decisions. By consistently applying a solid risk-reward ratio, investors can remain profitable even if not all trades succeed. It’s a fundamental principle for long-term success, particularly in volatile markets, and is widely used in stock trading, forex, crypto, and other financial markets to optimize performance and minimize losses.