What is risk to reward ratio?

Risk-to-reward (R:R) ratio compares what you risk on a trade to what you stand to gain. A 1:2 R:R means you risk $100 to potentially make $200. It's expressed as risk:reward, so 1:2 means the reward is twice the risk.

What is a good risk to reward ratio?

There's no universally good R:R. It depends on your win rate. A 1:3 R:R only needs a 25% win rate to break even. A 1:1 R:R needs 50%. Most profitable traders use R:R between 1:1.5 and 1:3 combined with win rates that exceed the breakeven threshold by a meaningful margin.

Trading Education

Risk-to-Reward Ratio: The Math That Decides If Your Strategy Works

6 min readApril 2026

Risk-to-reward ratio is probably the most discussed and most misunderstood concept in trading. 'Never take a trade below 1:2' is standard advice. But it's incomplete. R:R means nothing without win rate. And win rate means nothing without R:R. They're two halves of the same equation.

The Breakeven Formula

The breakeven win rate for any R:R is: 1 / (1 + R:R). At 1:1, you need 50% wins. At 1:2, you need 33.3%. At 1:3, you need 25%. At 1:0.5 (risking more than you stand to gain), you need 66.7%.

R:R Ratio	Breakeven Win Rate	Needed for 2% Monthly Edge
1:0.5	66.7%	~72%
1:1	50.0%	~55%
1:1.5	40.0%	~45%
1:2	33.3%	~38%
1:3	25.0%	~30%

Use the R:R Breakeven Calculator to find the exact win rate you need for your specific ratio.

Why Higher R:R Isn't Always Better

Aiming for 1:3 sounds great. Risk $100 to make $300. But higher reward targets require wider take-profit levels, which means fewer trades hit the target. Your win rate drops. If it drops below 25% (the breakeven for 1:3), you're losing money despite the 'good' R:R.

Many scalpers are profitable at 1:0.8 because their win rate is 65-70%. Many swing traders are profitable at 1:3 because they only take trades with high conviction. The right R:R is the one where your win rate exceeds the breakeven threshold by a consistent margin.

Expectancy: The Combined Metric

Expectancy combines win rate and R:R into a single number: (Win% x Avg Win) - (Loss% x Avg Loss). Positive expectancy = profitable over time. This is the number that actually tells you if your strategy works. All the individual metrics feed into it.

Read our full guide on trading metrics for a deeper breakdown of expectancy and related measures.

See Your Real R:R and Expectancy

CopyOptic calculates your actual average R:R, win rate, and expectancy from your live trade data. Stop guessing and see the real numbers.

Connect Your Account Free

Summary

R:R ratio only matters relative to win rate. Calculate your breakeven win rate using 1/(1+R:R). Make sure your actual win rate exceeds that threshold consistently. Higher R:R isn't better if it comes with a win rate below breakeven. Track your real R:R and expectancy from live data, not from backtests or theory.