#RiskRewardRatio
The hashtag #RiskRewardRatio is key for any smart trader or investor—it’s all about comparing the potential loss to the potential gain on a trade or investment.
Here’s how it works:
Risk/Reward Ratio = Potential Loss / Potential Gain
For example, if you're risking $100 to possibly make $300, the risk/reward ratio is 1:3.
Why it matters:
Helps you decide if a trade is worth taking.
Guides position sizing and stop-loss placement.
Keeps emotions out of decisions—more discipline, less gambling.
Pro tip:
Many traders aim for ratios of 1:2 or better. That way, even if they’re only right half the time, they still come out ahead overall.
Do you use risk/reward ratios in your strategy, or are you starting to build a trading plan?
