Module 6: Risk Management
Risk-to-Reward Ratio
5 min read
The risk-to-reward ratio compares potential loss with potential profit.
Win rate and R:R together
With 1:2 risk-to-reward, you break even (before costs) if about one in three trades wins. With 1:1, you need about half to win.
A high ratio is meaningless if the target is unrealistic. Base targets on market structure, not on a fixed number.
Key takeaways
- R:R and win rate work together.
- Break-even win rate = 1 ÷ (1 + R).
- Targets must be realistic.
Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.