#RiskRewardRatio The risk-reward ratio is a crucial metric in trading and investing, measuring potential profit against potential loss. It helps traders evaluate the viability of a trade, determining whether potential gains justify potential risks. A favorable risk-reward ratio, such as 1:2 or 1:3, indicates potential profits outweigh potential losses. This ratio enables traders to make informed decisions, manage risk, and optimize returns. By maintaining a consistent risk-reward ratio, traders can develop a disciplined approach to trading, increasing their chances of long-term success. Effective risk management is essential to achieving trading goals and minimizing losses. It's a key strategy.