Risk vs rewards, any advice?

<p id="isPasted">The core principle is that a higher potential reward typically comes with a higher risk. For example, a high-growth tech stock offers the potential for significant returns but carries a much higher risk than a stable, low-yield government bond.&nbsp;</p><p><br></p>

<p id="isPasted">The relationship between risk and reward is quantified by the risk/reward ratio. This metric helps traders determine whether an investment is worthwhile before entering a trade by comparing the potential loss to the potential profit.&nbsp;</p><p><strong>Calculation:</strong></p><ul><li>Risk/Reward Ratio = (Potential Entry Price - Stop-Loss Price) / (Target Price - Potential Entry Price)&nbsp;</li><li>For example, if you buy a stock at $50 and set a stop-loss at $45 (risk of $5) and a target price of $65 (potential reward of $15), your calculation would be: $5 / $15 = 1:3 ratio. </li></ul><p><strong>Interpreting the ratio:</strong></p><ul><li>A low ratio (e.g., 1:3) is considered favorable, as it means you stand to gain more than you could lose. This allows you to have a lower winning percentage on trades and still be profitable over time.</li><li>A high ratio (e.g., 2:1) is less favorable, as your potential loss is twice your potential gain. This would require an extremely high win rate to be profitable in the long run. </li></ul>