What is Risk-to-Reward Ratio (R:R)?
A measure used by traders to compare the potential profit of a trade to its potential loss.
In-Depth Explanation
Practical Example
"The trade has a 1:2 risk-to-reward ratio, which meets the trader's minimum requirements."
Related Terminology
Stop Loss
An order placed with a broker to sell (or buy) an asset when it reaches a certain price, to limit losses.
Take Profit
An order placed to close a profitable trade once it reaches a specific price target.
Guaranteed Stop Loss
A premium stop loss order that guarantees your trade will be closed at your exact price, regardless of market gaps or slippage.
Trailing Stop
A type of stop loss order that moves automatically as the price of an asset moves in your favor.
Tactical How-To Guides
How to Start Trading in the UK — Step by Step
Learn how to start trading in the UK. A complete step-by-step guide covering regulation, choosing a broker, and placing your first trade safely.
How to Day Trade — Step by Step
Master the art of day trading. Learn how to manage your time, choose instruments, and execute trades within a single day.
How to Set a Stop Loss Properly
A stop-loss is your insurance policy. Learn how to place stops based on market structure rather than random numbers.
Master the language of risk
Knowing the terms is just the start. Learning how to apply them is where the edge is found.
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