Understanding Risk-Reward: It's Not Just About Wins

Hey everyone, wanted to quickly touch on risk-reward ratios. It's fundamental but often overlooked when the market's moving fast. Basically, it's the potential profit you expect to gain from a trade versus the potential loss you could incur. For example, if you're eyeing a potential move on $USDSEK up to 9.75 from its current 9.66, but your stop loss is at 9.60, that's a 3x risk-reward ratio (9 points profit for 3 points risk). The goal isn't just to be right more often, but to ensure that when you are right, you make significantly more than you lose when you're wrong. Even a strategy with a 50% win rate can be very profitable if your winners consistently outweigh your losers.