Why risk/reward and win rate are two halves of one coin
Risk/reward is simply how much you stand to gain versus how much you'll lose if the stop hits. A 1:2 setup means the target is twice as far as the stop. The magic of a good ratio is that it lowers the win rate you need: at 1:2 you only have to be right 33% of the time to break even; at 1:3, just 25%. That's why disciplined traders obsess over it — you can be wrong more often than right and still make money.
But a big ratio isn't free. Targets that are far away get hit less often, so chasing 1:5 setups usually drops your real win rate. What actually matters is expectancy — your win rate and your ratio combined into one number: the average dollars (in R, your risk unit) you make per trade. Positive expectancy compounds; negative expectancy is a slow bleed no position size can fix. Enter your win rate above to see yours.
Pair this with sizing: decide how many dollars one R is with the position size calculator, check where the trade gets liquidated with the liquidation calculator, and see your blow-up odds over many trades with the risk of ruin calculator.
FAQ
What's a good risk/reward ratio? Many traders want at least 1:2, so that a sub-50% win rate is still profitable — but the right number depends on how often your setups actually reach target.
How is break-even win rate calculated? It's 1 / (1 + reward÷risk). A 1:2 ratio → 1/(1+2) = 33.3%.