#RiskRewardRatio

The risk/reward ratio measures potential profit against potential loss in a trade, guiding smarter investment decisions. For instance, a 1:3 ratio means risking $1 to gain $3—ensuring gains outweigh losses over time. Traders use this metric to filter high-probability opportunities, avoiding trades with skewed downside risks. Setting predefined ratios (e.g., 1:2 minimum) enforces discipline, preventing emotional overexposure. In volatile markets like crypto, this strategy is crucial; even with a 50% win rate, favorable ratios sustain profitability. Always calculate entry/exit points using technical analysis or support/resistance levels. Remember: consistency beats short-term gambles. Refine your ratio as market conditions evolve.