What risk-reward ratio means in crypto.

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.

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.