Risk to Reward (RR or R:R)

Terminology that indicates the prospective or anticipated Reward a trader can earn for every dollar they Risk.

Explanation: For every $x that I risk, I have received $y at the closure of the trade.

If a trader states that they have a Risk: Reward ratio of 1:3, that indicators for every $1 they risk on a trade, they receive $3 in return.

Risk: Reward is an important part of effective Risk Management that a trader employs to ensure they stay profitable.

The higher the traders' R: R, the better.