The risk-reward ratio is crucial for successful trading.It compares potential profit to potential loss in a trade.For instance, risk $100 to make $300—that’s a 1:3 ratio.A higher ratio means the reward outweighs the risk.Many traders aim for at least a 1:2 ratio.This ensures wins outpace losses over time.Calculate it using your entry point, stop-loss, and target price.Always determine these before entering a trade.This disciplined approach leads to smarter decisions.Use the risk-reward ratio to improve your trading strategy.
