#RiskRewardRatio

#RiskRewardRatio: what is it and why is it necessary for a trader?

If you want to earn in trading, the first thing you need to understand is not only where the market will go, but whether it is worth entering a trade at all. This is why the concept of Risk/Reward Ratio (RRR) exists — the ratio of potential loss to possible profit.

For example:

You risk 100 rubles to earn 300.

RRR = 1:3 — an excellent ratio!

The golden rule: risk less than you can earn.

The minimally acceptable RRR is 1:2. This means that even if half of the trades are losing, you are still in profit.

Why is this important?

Because the market is always about probability. Even experienced traders make mistakes. But if you have a good risk/reward ratio, you don't need to be right all the time to be profitable.

Conclusion:

Your task is to find trades where the potential profit justifies the risk.

And remember: risk management is the key to surviving in the market.

!