#RiskRewardRatio The Risk-Reward Ratio (RRR) is a key concept in trading and investing. It measures the potential profit of a trade relative to the potential loss. It's a way to assess whether a trade is worth taking based on the amount of risk involved.

The formula is:

\text{Risk-Reward Ratio} = \frac{\text{Potential Loss}}{\text{Potential Profit}}

For example:

If you're risking $100 on a trade and the potential profit is $300, your RRR is 1:3.

A 1:1 ratio means you're risking the same amount as your potential reward.

Traders typically aim for a Risk-Reward Ratio of at least 1:2 or 1:3, meaning they seek to gain two or three times more than they are willing to lose.