The Risk/Reward Ratio is a key factor in capital management when trading. It helps traders determine in advance the acceptable loss compared to the expected profit from each order. For example, if you accept a risk of 10067927609083 to earn back $300, then the R:R ratio is 1:3 – a quite ideal level. Maintaining a good R:R ratio allows you to lose many small trades but still be profitable overall if the winning trades have large enough profits. Don't just look at the entry point; always set reasonable stop-loss and take-profit levels to optimize profits.

#RiskRewardRatio