What is Risk/Reward Ratio?
Risk ManagementBeginner
The risk/reward ratio compares the potential loss to the potential gain on a trade. A 1:3 ratio means you risk £1 to potentially make £3. As a rule of thumb, only take trades with a risk/reward of 1:2 or better — it means you can be wrong more often than right and still profit.
Related terms: Stop Loss Take Profit Position Size Win Rate
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