JoymistaWhat Is the Risk-Reward Ratio?
The risk-reward ratio compares what you risk to your stop with what you aim for at your target, such as 1:2: risking one unit to make two.
Explained
The ratio alone is not enough; it works together with your win rate. At 1:2 you need to win a bit more than one trade in three to cover losses before costs, because breakeven = 1 ÷ (1 + 2).
Example
Example with made-up numbersEntry 1.1000, stop 1.0960 (40 pips), target 1.1080 (80 pips), so the ratio is 40 to 80, or 1:2, and the breakeven win rate is about 33.3%.
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Open in JoymistaEducational content, not investment advice.