Glossary
Risk-reward ratio meaning in crypto.
Risk-reward compares planned downside with planned upside before entry.
Definition
Risk-reward ratio compares the amount a trader could lose if the stop is hit with the amount that could be made if the target is reached.
In practice
It helps decide whether a setup is attractive before entry. Even a setup with a solid win rate can underperform if the downside is too large relative to the reward.
The mistake is treating one fixed ratio as a universal rule. The goal is to use it as a planning filter tied to the setup and market condition.
Related reading
See the term in a practice flow.
Open ZEROHUE to watch the market, place a paper order, and review how the concept shows up in execution.
Open Simulator