The simplest way to know whether a setup is worth taking. Enter your entry, stop and target - and see exactly how much you stand to gain for every dollar you put at risk.
Most profitable traders aim for at least 2:1. The higher your reward relative to risk, the fewer trades you need to win to stay green.
Win more than 25% of these trades and you come out ahead over time.
A trade with a 1:3 ratio means you risk $1 to make $3. Even with a 40% win rate, that's a profitable strategy over time - and it's the simplest test of whether a setup is worth your capital.
If the distance to your target is barely wider than the distance to your stop, the math is working against you. A minimum ratio gives you a hard rule to walk away from trades that look tempting but aren't worth the risk.
At 1:3, you only need to win one in four trades to break even. Favorable risk-reward builds a mathematical edge that holds up even when you're wrong more often than you're right.
A high ratio isn't automatically better - targets that are far away get hit less often. The breakeven win rate tells you the minimum hit rate this setup needs to be profitable, so you can judge it honestly against your own track record.
Ratio = Reward ÷ Risk
For every $1 you risk you stand to make $3 - so you only need to win 1 in 4 trades to break even.
Know exactly how many shares to buy for your risk budget.
How much your strategy earns on average per trade.
Whether your gross profits outweigh your gross losses.
See the full payoff profile for any call or put.
TradeOlogy logs every trade and computes risk-reward, expectancy, profit factor and more - so you can see which setups actually pay off.
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