#RiskRewardRatio Risk-Reward Ratio (RRR) – Quick Guide
Definition:
The Risk-Reward Ratio compares the potential loss (risk) to the potential profit (reward) on a trade.
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Formula:
RRR = Potential Loss / Potential Gain
Example:
Buy BTC at $30,000
Stop-loss at $29,500 (risk = $500)
Take-profit at $31,500 (reward = $1,500)
RRR = 500 / 1500 = 1:3
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Ideal Ratio:
Most traders aim for 1:2 or higher, meaning you risk $1 to make $2 (or more).
A better RRR allows you to be profitable even with fewer winning trades.
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Why It Matters:
Helps you manage losses
Keeps emotions out of trading
Ensures long-term profitability
