Trader's Glossary

R:RRisk-to-Reward Ratio

Reward distance ÷ risk distance. A 1:3 R:R means you risk $1 to make $3. Most pros only trade 1:2 or better.

Risk-to-Reward (R:R) is the ratio between potential profit and potential loss on a trade. A 1:3 R:R means you risk $1 to make $3. The math: if you take 10 trades at 1:3 R:R and only win 4, you're still up +2R net.

Professional traders typically refuse any setup below 1:2 R:R. Funded prop traders are mandated to 1:3+. Calculate R:R BEFORE entering: distance from entry to stop = 1R; distance from entry to target = your reward in R. Most discretionary losses come from holding past your planned TP or moving stops further — both kill your R:R.