Reward to risk, and why win rate isn't everything

Reward to risk compares what you could make with what you could lose. Risk 10 pips to make 30 and your reward to risk is 1:3.

It sets the win rate you need to break even, before costs:

So a trader who wins only 35% of the time can be profitable at 1:3, while a trader who wins 70% of the time can lose money if their wins are small and their losses big.

Measuring in R

On this site results are measured in R, where 1R is what you risked. A target hit at 1:3 is +3R and a stop out is always −1R. R lets you compare trades of any size fairly, and it's how the leaderboard ranks people.

The catch

Higher targets get hit less often. A 1:5 target that price rarely reaches isn't better than a 1:2 target it reaches regularly. Look at where the next support or resistance sits. A target just past a recent turning point often stalls before it fills, and the checker flags that.

Key points

• Reward to risk sets the win rate you need.
• 1:2 or better gives you room to be wrong.
• Targets should respect the levels in the way.

Try it in the checker

Drag your target up and watch reward to risk improve. Then check whether a "levels in path" warning appears.