Risk / Reward

The risk to reward ratio compares the distance to your stop with the distance to your target. On its own it tells you very little. Its meaning comes from the win rate that goes with it: the share of trades that must reach the target for the set as a whole to break even.

The two pull against each other. A distant target improves the ratio but is reached less often; a near target is reached more often and pays less. The table shows only the arithmetic of that trade-off. It cannot tell you how often a particular target will be reached, and no ratio is better than another in itself.