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Glossary
TRADING GLOSSARY

Risk/Reward Ratio

How much you stand to gain versus how much you're risking on a single trade.

The risk/reward ratio compares the distance from entry to stop-loss (what you're risking) against the distance from entry to take-profit (what you stand to gain), commonly written as 1:2 or 1:3. On its own it says nothing about profitability — a strategy's actual edge only emerges when the ratio is combined with win rate through expected value.

Try the calculator: Risk / Reward Calculator

Related Terms

Expected ValueStop LossTake Profit
Risk/Reward Ratio — Definition · PIPAVO