All terms
Definition
Risk-to-Reward Ratio
Risk-to-Reward compares how much you could lose to how much you could gain on a trade.
Quick take
What you could lose vs. what you could gain.
Keep this in mind every time you see risk-to-reward ratio on the chart — context is everything.
Did You Know?
With a 1:3 risk-to-reward ratio, you only need to win about 1 in 3 trades to be profitable.
Common Beginner Mistake
Taking trades with reward smaller than risk — even a high win rate can't save a portfolio with bad R:R.