Orders & Risk
Risk-to-reward (R)
How much you stand to make compared with what you risk. Risking 20 pips to make 40 is 1:2. One unit of risk is called 1R.
Also called: risk-to-reward, risk reward, r multiple
In practice
You risk $100 (1R) to make $200 (2R). Even if only 4 of 10 such trades win, you net +4R (4 × 2R won − 6 × 1R lost = +2R, repeated) — profitable despite a 40% win rate. Compare that with risking $100 to make $50 (1:0.5), where you need a 67% win rate just to break even.
Why it matters for traders
Risk-to-reward is the mathematical backbone of trading survival: it lets you be wrong most of the time and still make money. Traders who fix R before entry never rely on being 'right', and they can evaluate their strategy in R terms that survive different instruments and position sizes.
Common pitfall
Beginners set ambitious reward targets to make a '1:3' ratio on paper, then take profit early because the target never gets reached, destroying the ratio they planned. The pitfall is planning one R and trading another. Only set reward targets at real structure, and if you habitually exit early, either your targets are unrealistic or your discipline is — both shrink your effective reward below what the plan promised.
Lessons that use this term
- Risk-to-reward ratio
How R multiples and win rate combine to decide whether you make money.
Related tips
Related terms
Trade Forex, Metals & Crypto with Exness
From 0.0 pips on Raw Spread / Zero accounts (commission applies). E-wallet withdrawals typically process within minutes; cards and bank wires usually take 3–5 business days. No deposit fees. Regulated across multiple jurisdictions.
Spreads may fluctuate and widen due to factors including market volatility, news events, market open/close, and others. Processing times may vary depending on the chosen payment method.
Danipips Blog