Robert Wilson#96

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How do recovery factor and risk-reward ratio complement forex evaluation?

Recovery factor measures net profit divided by maximum drawdown, while risk-reward ratio compares average win size to average loss size. Institutions demand high recovery factors to ensure efficiency. Retail traders often ignore risk-reward, focusing on win rate. Benefits: these metrics enforce discipline, showing whether profits compensate for risks. Risks: high risk-reward but low win rate may cause emotional difficulty. Balanced ratios improve consistency. Together, they ensure traders don’t just make money but make it sustainably.