What reward-to-risk actually tells you
Reward-to-risk is the distance from your entry to your target divided by the distance from your entry to your stop. On its own it says nothing about whether a trade is worth taking — a 3R setup that works one time in five loses money, and a 1.5R setup that works two times in three makes it.
The number people quote, and the number that matters
Reward-to-risk is easy to compute and easy to inflate, which is why it gets quoted so often. Move the target further away and the ratio improves on paper while the probability of ever reaching it drops. Nothing about the setup changed.
The pairing that means something is ratio plus hit rate. Neither is interpretable alone.
Break-even win rates
For a given reward-to-risk, the win rate you need just to break even is 1 ÷ (R + 1):
| Reward : risk | Break-even win rate | Result at a 40% win rate |
|---|---|---|
| 0.5R | 66.7% | −0.40R per trade |
| 1R | 50.0% | −0.20R per trade |
| 1.5R | 40.0% | break even |
| 2R | 33.3% | +0.20R per trade |
| 3R | 25.0% | +0.60R per trade |
| 5R | 16.7% | +1.40R per trade |
The right-hand column assumes a 40% win rate holds at every ratio, which it does not — that is the whole catch. Win rate falls as targets get further away. The table shows what the ratio buys you if the hit rate survives, and the only way to know that is to measure it.
Measure from the middle of the entry zone
If your entry zone is 66,200 to 66,900 with a stop at 64,800 and a target at 70,100, the honest calculation uses the midpoint of 66,550: risk 1,750, reward 3,550, so 2.03R. Measuring from the bottom of the zone gives 2.36R — a 16% improvement produced entirely by assuming a perfect fill.
ChartLens always computes it from the midpoint, and recomputes it server-side rather than trusting the model’s own arithmetic.
Why this is the number to track
Win rate alone is gameable — take profit early enough and you can win 80% of the time while losing money. Average realised R is not, because it incorporates both how often you win and how much winning is worth relative to losing.
That is why the ChartLens track record publishes both: the hit rate and the average realised R across every scored analysis.
People also ask
What is a good reward-to-risk ratio?
There is no such thing on its own. A 2R setup needs a win rate above 33% to break even; a 1R setup needs above 50%. The ratio is only meaningful paired with how often that kind of setup actually works.
How do you calculate reward-to-risk?
Distance from entry to target divided by distance from entry to stop. Measure from the middle of your entry zone, not its favourable edge — quoting the best-case fill is how a 1.8R setup gets advertised as 2.4R.
Is a higher ratio always better?
No. Ratios get large by using distant targets, and distant targets are reached less often. A 6R setup that works one time in ten is worse than a 2R setup that works four times in ten.
What win rate do I need to break even?
One divided by (reward-to-risk plus one). At 1R you need 50%, at 2R 33%, at 3R 25%, at 5R about 17%. Those are break-even before fees, not targets to aim at.
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Written by The ChartLens team. Last updated .