#RiskRewardRatio

#RiskRewardRatio is a fundamental concept in trading and investing, used to evaluate the potential return of an investment relative to its risk. It compares the amount of profit expected (reward) to the potential loss (risk). For example, a 1:3 ratio means risking $1 to potentially earn $3. A favorable risk-reward ratio helps traders make smarter decisions by ensuring potential gains outweigh possible losses. This strategy encourages discipline and consistency, reducing emotional trading. Successful investors often seek trades with high reward and low risk to maximize profitability over time. Understanding and applying the risk-reward ratio is key to long-term financial success.