The Risk/Reward Ratio (RRR) is a

fundamental concept in trading that

compares the potential profit of a trade to

its potential loss. Calculated by dividing the

potential reward by the potential risk, it

helps traders assess the viability of a trade.

For instance, risking $100 to gain $300

results in a 1:3 ratio. A higher RRR indicates

a more favorable trade, as it suggests

greater potential profit relative to risk.

Traders often aim for ratios like 1:2 or 1:3 to

ensure that potential rewards outweigh

risks, even if they don't win every trade. By

consistently applying the RRR, traders can

make more informed decisions and enhance

their overall profitability. #RiskRewardRatio