#RiskRewardsRatio

The risk-reward ratio (or R:R ratio) in Binance — or any trading platform — is a metric traders use to compare the potential profit of a trade to the potential loss.

Formula:

Risk-Reward Ratio=Potential Loss (Risk)Potential Profit (Reward)\text{Risk-Reward Ratio} = \frac{\text{Potential Loss (Risk)}}{\text{Potential Profit (Reward)}}Risk-Reward Ratio=Potential Profit (Reward)Potential Loss (Risk)​

Example:

Let’s say:

You buy a coin at $100.

You set a stop-loss at $90 (meaning you're willing to lose $10).

You set a take-profit at $130 (hoping to gain $30).

So:

Risk = $10

Reward = $30

Then the R:R ratio = 10:30 = 1:3

That means you're risking $1 to potentially make $3.

Why It Matters:

Low R:R (e.g., 1:1 or worse): You need a high win rate to be profitable.

High R:R (e.g., 1:2 or 1:3): You can be profitable even if you lose more trades than you win.

How to Use in Binance:

When placing a Limit Order, set:

Stop-Loss = your risk level

Take-Profit = your reward target

Binance even shows you a Profit/Loss calculator on the trading interface (under “Advanced” mode) to help plan your trades.