GLOSSARY · RISK & PERFORMANCE

What is Risk-Reward Ratio (R)?

Risk-reward compares how much you can make to how much you risk; 1R is the amount risked.

Traders measure results in R. If you risk $100, a $200 winner is +2R and a full stop is −1R. Thinking in R keeps results comparable across different position sizes.

Break-even win rate = 1 ÷ (1 + reward-to-risk). At 1:1 that's 50%; at 1.5:1 it's 40%; at 2:1 it's 33%.

EXAMPLE

Entry 5,000, stop 4,996 (4 points risk), target 5,006 (6 points) = 1.5R.

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