#RiskRewardRatio The risk-to-reward ratio (RRR) is a key metric in trading that compares potential loss to potential gain. It’s calculated by dividing the risk (entry price minus stop-loss) by the reward (target price minus entry). For example, a 1:3 RRR means risking $1 to potentially gain $3. Traders use this ratio to evaluate whether a trade is worth taking. A favorable RRR helps maintain profitability even with lower win rates. Consistently applying a solid RRR strategy supports better risk management, reduces emotional decision-making, and enhances long-term success in volatile markets. Always align RRR with your trading plan and risk tolerance.