📊 Do you know how to calculate the Risk/Reward Ratio in your trades?
The risk-to-reward ratio is a crucial tool in determining whether a trade is worth the risk or not. 🤔
How do you calculate it?
\text{Risk/Reward Ratio} = \frac{\text{the amount you lose}}{\text{the amount you gain}}
🔹 Example:
If you are risking $100 to achieve a profit of $300, then the ratio is: 1:3
Why does the R/R ratio matter to you?
It increases your chances of success: It ensures that you make larger profits compared to losses.
It reduces risks: Even if your success rate is 40%, you are still profitable in the long run.
It organizes your trades: Avoid emotional decisions and stay committed to your plans.
Tip: Before entering any trade, always define the risk-to-reward ratio and set limits for losses and profits (Stop Loss and Take Profit) 🔒.
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