What minimum risk-reward ratio do you accept before you enter a trade?

Risk-reward compares how much you can lose on a trade with how much you aim to gain. A ratio of 1 to 2 means you aim to make twice what you risk. The ratio alone does not show whether a trade will work, because the win rate matters too. Leverage and margin explained shows how the size of a loss depends on the position, which affects any ratio you use.

What minimum risk-reward ratio do you accept before you enter a trade? — leverage and margin diagram
Leverage: a small margin controlling a larger position

Many new traders are told to use a fixed minimum ratio. The question is whether a fixed number works for you, or whether it depends on how often your setups win. A ratio that looks good on paper can still lose money if the win rate is lower than the ratio requires, which is why the two numbers belong in the same review. Measuring your own win rate over a sample of trades is the only way to know which minimum makes sense for your style.

What minimum risk-reward ratio do you accept before you enter a trade? — risk-reward diagram
A risk-reward ratio of 1 to 2

We would like to hear your rule:

  • What minimum ratio do you accept, and where did that number come from?
  • How does your win rate change the ratio you need to stay profitable?
  • Do you use the same minimum for every pair and timeframe?
  • What did you change after you first measured your own results?

Please share your own approach and reasoning, not calls for others to copy. Posts that promise a direction or sell signals will be removed.

Background: Leverage and margin explained: margin calls, stop-outs and how losses grow

Leverage lets you control a large position with a small deposit. It magnifies losses exactly as much as gains, and it is behind most blown trading accounts.

What does 30:1 leverage mean?

You can control a position 30 times larger than your margin deposit. $1,000 of margin opens a $30,000 position, and gains and losses are calculated on the full $30,000.

What is a margin call?

A warning from your broker that losses have reduced your margin level to a set threshold. If it keeps falling, the broker starts closing positions automatically, which is called a stop-out.

Read the full guide

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