Let’s make this as simple as possible.
What Is Risk-to-Reward Ratio (RRR)?
Risk-to-Reward Ratio tells you “How much you’re willing to lose vs how much you aim to gain.”
For example:
• You risk \$10 to make \$30
• Your RRR is 1:3 (Risk 1 to Gain 3)
Why It’s
So Important
Let’s say you take 10 trades:
• You win 4
• You lose 6
Now, most people would think“You lost more Trades than you won, you’re a failure.”
But thats not the case if your Risk-to-Reward Ratio was 1:3!
Here’s the math:
• 4 wins x \$30 = \$120 gained
• 6 losses x \$10 = \$60 lost
• Final result: \$60 PROFIT
Even with more losses than wins, you still make money, and this is how real traders win.
How to Set Risk-to-Reward on MetaTrader 5
• Pick your Entry Point (e.g. Buy at 1.1000)
• Set your Stop Loss (e.g. 1.0980 = 20 pips risk)
• Set your Take Profit (e.g. 1.1060 = 60 pips reward)
This gives you a 1:3 Risk-to-Reward. Always try to trade with at least a 1:2 or 1:3 ratio. Avoid 1:1 unless you’re extremely accurate.
What Happens When You Ignore It?
• You risk \$50 to gain \$10 (bad idea)
• A single loss wipes out 5 small wins
• You lose confidence
• You feel like you’re “always losing”
Without good RRR, even with 70% win rate you can still lose money.
What Makes a Good Trade Setup?
• Risk-to-Reward is in your favor
• Your stop loss is small and logical (e.g. behind structure or support)
• Your take profit has space to be reached (not set randomly)
• The Market Direction supports your idea
It’s not about being right. It’s about making more when you’re right, and losing less when you’re wrong.
Final Example:
You have a \$100 account.
You risk 2% = \$2 per trade.
You aim for 1:3 RRR.
After 10 trades:
• 4 wins = \$24
• 6 losses = \$12
• Total = \$12 profit
Even though you lost more trades!
The Bottom Line
Risk-to-Reward Ratio is your secret weapon. It allows small accounts to grow.
It keeps you calm, focused, and consistent.
Never enter a trade unless your reward is at least twice your risk. This is the golden rule of winning traders.
What you need to know next, Is to analyze the market before you trade so you can find the perfect entry and exit points with smart Risk-to-Reward setups.