#RiskRewardRatio
The risk-reward ratio is a crucial concept in investing and trading, representing the potential profit compared to the potential loss of a trade or investment. It's calculated by dividing the potential reward by the potential risk. For example, if you risk $100 and could potentially make $300, the risk-reward ratio would be 1:3 (or 0.33). A higher ratio indicates a more favorable risk-reward profile, suggesting a greater potential profit for each unit of risk.
