#USStablecoinBill

The Risk/Reward Ratio is a measure used to determine the relationship between potential risks and potential returns in a specific trade.

Example

- Let's assume you want to buy a stock at a price of $100 and expect it to reach $120.

- You can set a stop loss at $90.

- In this case, the risk is $10 ($100 - $90) and the potential return is $20 ($120 - $100).

- The risk to reward ratio is 1:2 ($10/$20).

Interpreting the Ratio

- A ratio of 1:2 means you are risking $1 to gain $2.

- This ratio is considered good, as the potential return is greater than the risk.

Other Examples

| Current Price | Stop Loss | Target | Risk | Return | Ratio |

| ----------------------- | --------------------- | ---------- | ---------------- | ------------ | ------------ |

| 100 | 90 | 120 | 10 | 20 | 1:2 |

| 50 | 45 | 60 | 5 | 10 | 1:2 |

| 200 | 180 | 220 | 20 | 20 | 1:1 |

How to Use the Ratio

- Use the risk to reward ratio to determine if the trade is worth the risk.

- Look for trades with a good risk to reward ratio (1:2 or better).

- Set stop losses and targets before entering the trade.