#RiskRewardRatio The risk-reward ratio is a basic but powerful tool for traders. It shows how much you could lose (risk) compared to how much you could gain (reward) on a trade.

For example, if you're risking $100 to make $300, your ratio is 1:3. That means you're trying to earn 3 times more than what you might lose.

Using a good risk-reward ratio helps you trade smarter. Even if not all your trades win, you can still be profitable. With a 1:3 ratio, winning just 4 out of 10 trades can still make you money.

Most experienced traders aim for at least 1:2 or higher. Always check your ratio before entering a trade—it helps you stay disciplined and improves your chances of long-term success.