Risk/Reward Ratio Chart
Before you take a trade, you need to know how much you could make versus how much you could lose. This chart shows which combinations of win rate and reward to risk actually make money over time, and which ones do not.
What is the risk/reward ratio?
The risk/reward ratio compares how much you stand to make on a trade against how much you are risking to make it. If you risk $100 to make $300, that is a 3:1 reward to risk ratio.
The higher the ratio, the fewer trades you need to win to come out ahead. That is the whole reason traders care about it. A big ratio lets a low win rate still make money, because the wins are large enough to cover the losses.
The breakeven win rate formula
A 2:1 ratio breaks even at 1 divided by 3, which is about 33%. So at 2:1 you only need to win a third of your trades to avoid losing money, and anything above that is profit. This is why a high reward to risk ratio lets you be profitable with a low win rate.
How to read this chart
Each row is a reward to risk ratio. Each column is a win rate. Green means that combination makes money over time, amber means it breaks even, and red means it loses. Find the row for your typical ratio, then move across to your win rate.
If you land on green, your approach has an edge. If you land on red, you need a bigger ratio, a higher win rate, or both.
Frequently asked questions
What does risk to reward mean?
If you risk $100 on a trade and your target profit is $300, that is a 3:1 reward to risk ratio. It means you stand to make three dollars for every one dollar you put at risk.
How do I read this table?
Each row is a reward to risk ratio. Each column is a win rate. Green means that combination makes money over time. Red means it loses money. Find where your numbers land to see if your approach works.
What should I aim for?
It depends on your system. A good starting point is 2:1, meaning you make twice what you risk. At 2:1 you only need to win 34% of the time to break even. As your strategy matures, aim higher. The better your ratio, the fewer wins you need to stay profitable.
Why does a higher ratio mean a lower win rate?
The bigger the profit you aim for on each trade, the less often price will actually reach your target. A 5:1 trade needs a large move in your favor, and that simply happens less often than a small one. The math still works because the few wins are large enough to cover the many small losses.
Are there exceptions?
Yes. Some systems achieve both high reward to risk and a decent win rate, but this usually only happens in strong trending markets. These are the exception, not the rule, and they tend to stop working when market conditions change.
See your real reward to risk
Trader Dashboard tracks the reward to risk on every trade you log, so you can see your actual ratios and win rate instead of estimating them. Access it with a Trader Dashboard subscription.
This chart is for education only. It is not financial advice.