The reward-to-risk ratio compares how much you stand to gain against how much you risk on a trade. At 1:2 you risk one unit to make two. The higher the ratio, the lower the win rate you need to break even — the break-even win rate is 1 ÷ (1 + R:R), so a 1:2 trade only needs to win about 33% of the time.
This term belongs to Risk & statistics. See how it fits the bigger picture in The Money, part of the free DEGEN ACADEMY — or watch it play out on the live terminal.
FAQ
What is Risk-reward ratio (R:R)?
The reward-to-risk ratio compares how much you stand to gain against how much you risk on a trade. At 1:2 you risk one unit to make two. The higher the ratio, the lower the win rate you need to break even — the break-even win rate is 1 ÷ (1 + R:R), so a 1:2 trade only needs to win about 33% of the time.