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Risk to Reward Ratio

Risk to Reward Ratio is a concept in investing and trading that measures the potential reward for every dollar risked. It’s used to manage potential losses and gains.

For example, if a trader is willing to risk ₹5 to make ₹15, the risk to reward ratio is 1:3, meaning the potential reward is three times the risk. Traders and investors often aim for trades with higher reward ratios to ensure that their potential profits are larger than the possible loss on individual trades.

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