Risk Management
Feb 1, 2026
Risk-Reward Ratio: Why 1:2 Isn't Always Better
Win rate vs R:R tradeoffs. Optimal R:R for different strategies. When to take 1:1 trades. Expectancy formula with real data.
The R:R Myth
Everyone says "aim for 1:2 or better." But a 60% win rate at 1:1 beats a 40% win rate at 1:2. It's about expectancy, not just R:R.
The Expectancy Formula
Expectancy = (Win Rate × Avg Win) - (Loss Rate × Avg Loss)
Chart: Profitability matrix showing win rate vs R:R combinations
Real Strategy Comparison
Chart: 60% at 1:1 vs 40% at 1:3 - which is better?
Focus on expectancy, not just R:R. A high win rate strategy at 1:1 can outperform a low win rate strategy at 1:3.
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