Understanding Risk-Reward in Crypto Trading

Many new traders focus solely on potential gains, but effective risk management starts with understanding your risk-reward ratio. This simply measures how much you're risking to make a certain amount. For example, if you're aiming for a $200 profit on a trade where you're willing to lose $100, your risk-reward is 1:2. A move like $CRV's current run up from $0.25403 to $0.2735 highlights the importance of having a defined exit strategy for both profit and loss before entering. Always aim for a favorable ratio, often 1:2 or higher, to ensure that even with a win rate below 50%, you can still be profitable long-term. Don't chase returns without clearly defining your downside.