#RiskRewardRatio

Risk-Reward Ratio: The Basis for Making Smart Trading Decisions

The Risk-Reward Ratio is a metric that determines the expected profit relative to each unit of risk in a trade. For example, if the ratio is 1:3, it means you are risking one dollar to achieve a profit of three dollars.

This ratio helps traders assess whether a trade is worth the risk. It is common for professionals to choose ratios like 1:2 or 1:3 to ensure long-term profits even with some losses.

The higher the return ratio compared to the risk, the greater the chances of success. However, it should be used with precise technical and fundamental analysis to ensure effective and well-considered decisions...