What Is Risk Reward Ratio?
The ratio between what you stand to lose if your stop is hit and what you gain if your target is reached. A trade risking 100 USDT to make 300 USDT has a 1:3 risk reward ratio. Positive expectancy comes from combining a sensible ratio with a realistic win rate.
Related Terms
- Stop Loss An order that automatically closes your position at a predefined price to cap your loss.
- Take Profit An order that automatically closes your position once price reaches your profit target.
- Risk Management The set of rules that keeps you solvent: risking a small fixed percentage per trade, using stop losses, limiting open exposure and avoiding revenge trading.
Where You Will Meet This Term
You will run into risk reward ratio constantly on any futures exchange, from the order panel to the position dashboard. If you are still building your foundation, our guides on leverage, liquidation and risk management connect the vocabulary into an actual trading process, and the full glossary covers every other term you will encounter.