Knowledge Base

Risk-Reward Ratio

R:R = (Target − Entry) / (Entry − Stop Loss)

Minimum 1:2 risk-reward means you can be wrong 60% of the time and still be profitable.

A 1:3 ratio with 40% win rate still generates positive expectancy.

Always set stop-loss and target BEFORE entering a trade — never move your stop-loss further.

Risk-reward should account for slippage and brokerage costs.

Higher R:R ratios often have lower win rates — find your optimal balance.

Pro Tip

Aim for minimum 1:2 R:R. A ₹100 risk should target ₹200+ reward. Walk away from poor setups.

Risk-Reward Ratio - Complete Guide

Everything you need to know about Risk-Reward Ratio and how to optimize your financial strategy.

Understanding the Formula

The core calculation is based on:

R:R = (Target − Entry) / (Entry − Stop Loss)

Key Concepts & Rules

Minimum 1:2 risk-reward means you can be wrong 60% of the time and still be profitable.

A 1:3 ratio with 40% win rate still generates positive expectancy.

Always set stop-loss and target BEFORE entering a trade — never move your stop-loss further.

Risk-reward should account for slippage and brokerage costs.

Higher R:R ratios often have lower win rates — find your optimal balance.

Expert Strategy

Aim for minimum 1:2 R:R. A ₹100 risk should target ₹200+ reward. Walk away from poor setups.

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