Risk-Reward Ratio

Performance Optimization

How much you can lose vs. how much you can gain on a trade. A comparison of potential loss to potential profit. A 1:3 risk-reward means risking $1 to potentially make $3. Good ratios allow you to be profitable even with a 40% win rate. Example: You risk $100 to make $300 (1:3 ratio). If you win 40% of your trades: 10 trades = 4 wins x $300 = $1,200, 6 losses x $100 = $600. Net profit: $600 despite losing 60% of trades.