What Is Risk-Reward Ratio? Break-Even Table
The risk-reward ratio is how much a trade stands to gain compared with what it stands to lose, written as 1:2 when the target is twice the distance of the stop. It is a plan before it is a result: risk is the distance to the stop-loss, reward is the distance to the target. Its only real job is to set the win rate you need in order to break even.
How it works
Risk-Reward = Reward per trade / Risk per trade
A $100 stop and a $250 target is 1:2.5. That ratio maps directly onto a required win rate:
Break-even Win Rate = 1 / (1 + Risk-Reward)
| Risk-reward | Break-even win rate |
|---|---|
| 1:0.5 | 66.7% |
| 1:1 | 50.0% |
| 1:1.5 | 40.0% |
| 1:2 | 33.3% |
| 1:3 | 25.0% |
| 1:5 | 16.7% |
Read the table in both directions. At 1:3, being wrong three times out of four still leaves the account flat. At 1:0.5 — the shape of most take-quick-profits systems — two trades in three must win before a single dollar is made.
Two adjustments make the planned ratio honest. Costs come off the reward and add to the risk, so a 1:2 on paper is nearer 1:1.8 on a tight stop. And the ratio holds only if the stop executes: one skipped in a gap is a risk figure that was never real.
Why it matters
Risk-reward is the lever that a trader controls directly. Win rate is largely handed over by the market; the payoff is set when the order is placed, and it decides how much of the win rate is available to be wrong with.
It is also the number that reveals a comfortable but losing habit. Cutting winners early and giving losers room raises the win rate and lowers the payoff at the same time. The screen looks better and the account gets worse — an outcome invisible in a win rate, obvious in expectancy and in profit factor.
What the data shows
The figures below describe accounts published on ShowMyTrades, not traders in general. The realised payoff of the typical published account runs the wrong way round. Across the published accounts that have trading history (August 2026), a median profit factor of 1.28 at a median win rate of 68.8% implies an average winner worth about 0.58× the average loser — a payoff of roughly 1:0.58, upside down relative to how risk-reward is normally taught.
The break-even win rate for that payoff is 63.3%. The median account wins 68.8% of the time and is therefore operating about five and a half percentage points above the line where it makes nothing at all.
That is the whole margin. It explains why the median time-weighted return is +3.2% on accounts that win nearly seven trades in ten, and why the median deepest drawdown is 9.7% — roughly three times the eventual return. A payoff that thin needs the win rate held near 70% permanently, and a run of ordinary losses is enough to push it under 63.3% for a quarter.
Where you see it on ShowMyTrades
The realised payoff is on every published account page even though no row is labelled "risk-reward": Avg. Win and Avg. Loss sit next to each other in the Trades group of the Advanced Statistics module, and their ratio is the payoff the account actually achieved rather than the one it intended. Win Rate, Expectancy and Profit Factor are in the same module, which is enough to run the break-even arithmetic above on any account in a few seconds.
The planned ratio, trade by trade, is in the trades table: the S/L and T/P columns show where the stop and target were set, alongside Pips, Profit (Gross) and Duration. An account whose T/P is consistently nearer than its S/L is declaring its payoff in advance. Where the owner has chosen to hide those columns on the public page, Best Trade (Pips) and Worst Trade (Pips) in Advanced Statistics still bound the distribution.
To check whether a payoff holds outside its best conditions, the Custom Analysis slideover recomputes Avg. Win, Avg. Loss and Expectancy on a filtered subset — one symbol, one magic number, one direction.
Common misunderstandings
- "A high risk-reward ratio is always better." It is not free. Distant targets are hit less often, so 1:5 comes with a win rate that can fall below 17% and still be fine — and most traders cannot sit through that.
- "My risk-reward is 1:3 because that is how I set the orders." That is the intended ratio. The realised one comes from Avg. Win and Avg. Loss, and manual exits, partial closes and slippage move it every time.
- "Risk-reward measures risk." It measures the shape of one trade. Account risk comes from position sizing and correlation across open trades, not from the ratio.
- "A losing system can be fixed by widening the target." Only if price actually reaches it. Widening a target without evidence lowers the win rate by exactly enough to leave expectancy where it was.
For the full arithmetic behind the 68.8% / 1.28 gap and how to run it on your own account, see why win rate is not an edge.
Related terms
Profit Factor
Profit factor is gross profit divided by gross loss. Below 1.0 an account loses by construction. Here are the bands and the 1.28 median across thousands of accounts.
Stop Loss
A stop loss is a pre-committed exit order that closes a losing trade at a set price. Types, why it is not a guarantee, and what thousands of real accounts show.
Expectancy
Expectancy is the average profit or loss of one trade: (win rate × avg win) − (loss rate × avg loss). The formula, a worked example, and public accounts.
Position Sizing
Position sizing turns a risk percentage into a lot size using your stop distance and pip value. The formula, the three common methods, and what bad sizing costs.