📘 Day 8 — Risk-Reward Ratio (The Math Behind Profitability)

Most traders focus on win rate.

Professionals focus on risk-reward.

Let’s understand why.

🔹 What Is Risk-Reward Ratio?

Risk-Reward =

How much you risk vs how much you aim to gain.

Example:

Risk = $10

Target = $20

That is 1:2 Risk-Reward

🔹 Why This Matters

Imagine 10 trades:

You risk $10 per trade.

You use 1:2 RR.

You win only 5 trades (50%).

Losses = 5 × $10 = –$50

Wins = 5 × $20 = +$100

Net Profit = +$50

Even with average win rate,

you grow.

🔹 Now Compare 1:1 RR

Risk $10

Target $10

Win 5 trades:

Losses = –$50

Wins = +$50

Net = $0

You work hard… and go nowhere.

🔹 Key Lesson

High win rate without good RR

= No growth.

Moderate win rate + Strong RR

= Long-term profit.

🧠 Professional Rule

Never enter trade without knowing:

• Stop loss

• Target

• Risk amount

• Risk-Reward ratio

If RR is bad → Skip trade.

Discipline > Excitement.#StrategyBTCPurchase

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