#RiskRewardRatio is a fundamental concept in trading and investing that helps assess the potential return of an investment relative to its risk. It compares the amount of profit expected (reward) to the amount of loss that could be faced (risk). For example, a 1:3 risk-reward ratio means risking $1 to potentially earn $3. Successful traders use this ratio to make informed decisions and maintain long-term profitability. A favorable risk-reward ratio ensures that even with a few losing trades, the overall portfolio can still grow. It encourages disciplined strategies, proper planning, and reduces emotional trading. Always analyze before you act.