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Nikita (SEBI RA)

11th Aug 2025 · SEBI-Registered Analyst

Risk-Reward Ratio – The First Filter Before Any Trade

🎯 Before entering any trade, check: Risk-Reward Ratio = Potential Profit / Potential Loss ✅ Ideal ratio = 1:2 or better (Risk ₹1 to make ₹2+) 📌 Example: Entry: ₹100, SL: ₹95 (Risk = ₹5), Target: ₹110 (Reward = ₹10) → R:R = 1:2 ✅ If target is only ₹104 (Reward = ₹4) → R:R = 1:0.8 ❌ (skip trade) 🧠 This discipline keeps losses small and winners big, even with a 50% win rate.

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