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Risk-reward ratio
In one line: How much you might lose compared with how much you hope to win on a trade.
Stop 2 below entry, target 4 above: risk 2, reward 4, ratio 1:2.
A nice ratio is not enough on its own. A 1:5 trade that almost never reaches its target can still lose money. What matters is the ratio and how often it works: see Expectancy. Ratios like 1:2 are a common practitioner habit, not a research-backed rule.
The Trade Compass calculator shows the ratio after fees.
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Last checked: 2026-11-04 · Educational, not financial advice.
Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.