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What Is a Good Risk Reward Ratio?

Your risk reward ratio defines how much you risk compared to how much you expect to make on a trade. It is one of the most important factors in long-term profitability.

The Basic Idea

A risk reward ratio compares your potential loss to your potential gain.

• 1:1 → risk $100 to make $100
• 1:2 → risk $100 to make $200
• 1:3 → risk $100 to make $300

What Is Considered “Good”?

Most traders aim for at least a 1:2 risk reward ratio.

This means your winning trades are larger than your losing trades, which helps offset losses over time.

Why Risk Reward Alone Is Not Enough

A high risk reward ratio does not guarantee profitability. Your win rate also matters.

For example:

• Low win rate + high reward can still be profitable
• High win rate + low reward can also work

Use These Calculators

Use these tools to analyze your trades:

• Risk Reward Calculator
• Expectancy Calculator
• Win Rate Calculator
• Profit Factor Calculator

Example

If you risk 1% per trade with a 1:2 risk reward ratio:

• Loss = -1%
• Win = +2%

You can be wrong more often than you are right and still grow your account.

Bottom Line

A good risk reward ratio depends on your strategy, but aiming for at least 1:2 gives you a strong mathematical edge.