Have you ever asked yourself why some traders make profits even when their losing trade percentage is higher?
The secret is simply one thing: the risk-to-reward ratio.
This equation is the first line of defense for any professional trader...
Because it allows you to enter the market knowing exactly how much you might lose and how much you might gain, without randomness or impulsiveness.
Why is it important?
If you lose two trades and win one with a risk-reward ratio of 1:3
You're comfortable and profitable, because one trade covers all losses… and even makes you profit on top.
How can you use it easily?
Before any trade, ask yourself one question:
How much am I aiming for? And how much am I willing to lose?
If the risk is greater than the reward, simply… don't enter!
Always better:
A 1:2 or 1:3 ratio
It means risking one dollar to make two or three dollars.
This is the difference between professionalism and gambling.
The smart trader doesn't look for many trades…
But rather high-quality trades with a fair risk-reward ratio.
