How to read it
A 1:2 risk-reward ratio means you risk 1 unit to potentially make 2. Risk-reward on its own says nothing about whether a trade is good: it must be considered with how often trades like it actually reach the target (the win rate).
| Risk-reward | Win rate needed to break even (before costs) |
|---|---|
| 1:1 | 50% |
| 1:2 | 33% |
| 1:3 | 25% |