#RiskRewardRatio The concept #RiskRewardRatio is a key concept that every trader must understand. It helps determine whether a trade is worth making by comparing potential profit with possible loss. For example, a risk-reward ratio of 1:3 means you risk $100 to potentially gain $300. This simple indicator improves decision-making and builds consistency in trading. A solid trading plan often aims for a favorable ratio (1:2 or higher) and avoids setups with low potential profit. By using this rule, even if you only win half of your trades, you can still be profitable. It's not always true — it's about managing risk wisely.