Understanding Risk-Reward in Trading

It's easy to get caught up in the 'what if' of a trade, but real focus should be on risk-reward. Essentially, it's comparing your potential loss if the trade goes wrong to your potential gain if it goes right. Say you're looking at $BTC and identify a setup where you risk $100 to potentially make $300. That's a 1:3 risk-reward ratio.

Why this matters: a good risk-reward ratio means you don't have to be right every time to be profitable. With a 1:3 ratio, you could be wrong twice as often as you are right and still break even. It's fundamental to sound trading, whether you're eyeing macro moves or short-term swings in $USDSEK or even something like $ROSE. Define your risk, then your reward, before you enter.