Risk-to-reward ratio (R:R)

R:R · RRR · risk/reward

DefinitionWhat a trade can make divided by what it can lose. The net R:R does the same after fees on entry and exit.

R:R = distance to Take Profit ÷ distance to Stop Loss. Enter at 100, stop at 98, target at 104: R:R 2.0.

Fees reduce the reward and add to the risk, so the net ratio is always lower than the gross one, and much lower on tight trades. The win rate needed to break even is 1 ÷ (1 + R:R): a net 2.0 needs 33%, a net 1.0 needs 50%. Full explanation in Net risk-to-reward.

Guides that use it

Risk management 2 min read Risk-to-reward ratio: why the net number is the one that counts Fees shrink the reward and grow the risk. How to calculate net R:R, the win rate it requires, and why small targets suffer most. Updated October 13, 2026
Psychology 2 min read When not to trade: a five-point NO TRADE checklist Skipping a bad setup is a decision, not a missed chance. Five checks that tell you when the right plan is no trade at all. Updated October 13, 2026
Risk management 2 min read Where to put a Stop Loss: structure, not hope A Stop Loss belongs where your trade idea is proven wrong, not at a round number or a random percentage. How to find that level on any chart. Updated October 13, 2026