#RiskRewardRatio
Successful traders know that managing risk is just as important as spotting opportunities. The risk-reward ratio helps you evaluate whether a trade is worth taking by comparing potential profit to potential loss. A common benchmark is a 1:2 ratio—risking $100 to gain $200, for example.
To apply this:
1. Set your stop-loss to limit downside.
2. Define your take-profit level based on market structure.
3. Avoid overleveraging; even high-probability trades can fail.
Discipline is key. Stick to your plan, and over time, a positive risk-reward strategy can improve your profitability.