Most traders phrase it wrong: it's not risk-to-reward, it's reward-to-risk. The ratio shows how much profit you make per dollar risked. Reducing risk by $1 improves your ratio more than adding $1 to reward.
Risk to reward, it's called risk to reward, but it's actually reward to risk because when people say risk to reward, it's like 2 to 1, but the reward is 2 times and your risk is 1. So it's more worth your time to focus on lowering your risk. Take 2 scenarios. The first scenario is going to be you increase your reward by $1. That means it goes from $4 to $5 and the risk remains the same, $2. In this case, your risk to reward is, say, 2.5. And the next scenario is going to be you keep the reward the same, which is $4. You reduce the risk by $1. This was 4 1 right here and kept it the same. This is 4 and 2 1. In the first case, I added 1 to the reward. The risk to reward is 2.5. In the second case, I kept reward the same. I reduced the risk by $1. It's $4. Mathematics.
