Risk/reward ratio
Updated 2026-09-20
Definition
The ratio between potential gain (target distance) and risk (stop distance) of a trade.
Why it matters
With 1:2 you only need to win about one trade in three to break even, before costs. The breakeven win rate is 1 ÷ (1 + R:R).
Practical example
Stop 30 pips, target 60 pips: a 1:2 ratio and a 33.3% breakeven win rate.
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Educational content, not financial advice. Trading involves risk.