What is risk-reward ratio, and how do I incorporate it into my strategy?

The risk-reward ratio measures the potential profit for every dollar risked. In forex trading, it's used to evaluate the worthiness of a trade based on its potential return versus potential loss. For instance, a 1:3 ratio means you risk $1 to gain $3. Incorporate it into your strategy by selecting trades with favorable risk-reward ratios, ensuring your potential rewards justify the risks. This helps manage overall risk, aiming for a strategy where the wins can adequately cover the losses and still produce a net profit.