UNIJOS MTL COMMUNITY

You are welcome we keep learning from each other.

You are welcome

There are different reasons and I will state them.

1.You can be wrong more than you're right and still profit. With a 1:2 ratio (risking $1 to make $2), you only need to win about 34% of your trades to break even. That gives you room for a losing streak without blowing up your account.

That's very possible

2.It protects you from one bad trade wiping out several good ones. If your risk and reward were equal (1:1), a couple of losses can erase multiple wins. A 1:2 ratio means your winners carry more weight than your losers.

3 It forces discipline on entries and exits. To hit a 1:2 setup, you have to identify a clear stop-loss and a realistic target before entering. This stops impulsive trades where you "hope it works out."

It smooths out the emotional rollercoaster. Knowing your worst-case loss is small compared to your potential gain makes it easier to stick to your plan instead of panic-selling or revenge-trading after a loss.

5. Compounding works better with asymmetric payoffs. Over hundreds of trades, small consistent losses paired with bigger wins grow your account faster than a system where wins and losses are the same size even if your win rate is just average.

Finally, One caveat worth knowing: a good risk-reward ratio doesn't guarantee profitability by itself it has to be paired with a strategy that actually has a reasonable win rate. A 1:2 ratio with a 10% win rate still loses money.

Basic definition: It's a comparison of how much you're willing to lose on a trade versus how much you stand to gain. It's written as Risk : Reward for example 1:2, 1:3

Hope this is understandable

The formula:

Risk/Reward Ratio = (Entry Price − Stop-Loss Price) ÷ (Take-Profit Price − Entry Price)

This gives you the risk side and reward side as a ratio...this is how it should be

A Simple example will be that : You buy a stock at $50, set a stop-loss at $48 (risking $2), and a target at $56 (potential gain of $6). Your ratio is 2:6, simplified to 1:3 ...meaning you're risking $1 to make $3

Finally is the Reverse-engineering the win rate: You can flip the formula to find the minimum win rate needed to break even:

Required Win Rate = Risk ÷ (Risk + Reward)

For a 1:2 ratio: 1 ÷ (1+2) = 33.3%. So you only need to win about 1 in 3 trades to avoid losing money over time.

You are welcome onboard

Finally..it's time to follow my tutor♥️

Great response

Wicked? Of a candle sticks 😂😂

My female king of Degen.♥️💯

Why am I just seeing this now?

My idolo with the favourite answer