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Understand Risk reward ratio in Hindi – how to calculate 1:2, 1:3 ratio, and why it is the foundation of profitable trading. With real examples.
Published by The Retail Trader · AUG 15, 2026 · Features
Understand Risk reward ratio in Hindi – how to calculate 1:2, 1:3 ratio, and why it is the foundation of profitable trading. With real examples.
Risk Reward ratio tells how much risk you are taking vs how much profit you are expecting.
Formula: R/R = (Target - Entry) / (Entry - Stop Loss)
Example:
• Entry: ₹100
• Stop Loss: ₹95 (risk = ₹5)
• Target: ₹110 (reward = ₹10)
• R/R = 10/5 = 1:2
Meaning: By risking ₹1, you are expecting ₹2 reward. 1:2 ratio.
The Math Behind Profitability:
• 30% — R/R 1:1: LOSS, R/R 1:2: BREAKEVEN, R/R 1:3: PROFIT
• 40% — R/R 1:1: LOSS, R/R 1:2: PROFIT, R/R 1:3: PROFIT
• 50% — R/R 1:1: BREAKEVEN, R/R 1:2: PROFIT, R/R 1:3: PROFIT
• 60% — R/R 1:1: PROFIT, R/R 1:2: PROFIT, R/R 1:3: PROFIT
Key insight:
• 60% win rate required on 1:1 R/R = very difficult
• Only 40% win rate at 1:2 R/R is enough = achievable
• Only 30% win rate at 1:3 R/R is enough = very achievable
Professional traders have 40-50% win rate but are profitable with 1:2+ R/R.
Amateurs have 70% win rate but 1:0.5 R/R (take profit quickly, let losses run) = net loss.
For Buy (Long) Trade:
• Entry: ₹500
• Stop Loss: ₹480
• Target: ₹540
• Risk = Entry - SL = 500 - 480 = ₹20
• Reward = Target - Entry = 540 - 500 = ₹40
• R/R = 40/20 = 1:2 ✅
For Sell (Short) Trade:
• Entry: ₹500
• Stop Loss: ₹520
• Target: ₹460
• Risk = SL - Entry = 520 - 500 = ₹20
• Reward = Entry - Target = 500 - 460 = ₹40
• R/R = 40/20 = 1:2 ✅
R-Multiple (Pro Concept):
• 1R = risk amount (e.g., ₹20)
• 2R = 2x risk = ₹40 profit
• -1R = loss = -₹20
• Trade result in R-multiples: +2R, -1R, +3R, -1R, +2R
Monthly P&L in R-multiples:
• Trade 1: +2R
• Trade 2: -1R
• Trade 3: +3R
• Trade 4: -1R
• Trade 5: +2R
• Total: +5R
• If 1R = ₹1,000 → Monthly profit = ₹5,000
By Trading Style:
• Intraday — Min R/R: 1:1.5, Why: Less time, smaller moves
• Swing — Min R/R: 1:2, Why: Enough time for 2x move
• Positional — Min R/R: 1:3, Why: Days/weeks for big moves
• Options Buying — Min R/R: 1:2, Why: Theta decay = need bigger wins
• Options Selling — Min R/R: 1:1, Why: High win rate (70%+) compensates
Golden Rules:
• Never trade below 1:1.5 R/R — mathematically losing proposition
• 1:2 minimum for swing trading — standard professional
• 1:3 for positional — bigger moves justify patience
• If setup doesn't meet R/R, SKIP IT — no trade is better than bad trade
Good Setup (1:3 R/R) ✅:
• Stock: RELIANCE
• Entry: ₹2,840 (at 20 EMA support)
• SL: ₹2,810 (below support)
• Target: ₹2,930 (previous high + extension)
• Risk = ₹30
• Reward = ₹90
• R/R = 3:1 (1:3) ✅✅✅
• Win rate needed: only 26% to be profitable!
Bad Setup (1:0.5 R/R) ❌:
• Stock: TCS
• Entry: ₹4,200
• SL: ₹4,180
• Target: ₹4,210
• Risk = ₹20
• Reward = ₹10
• R/R = 0.5:1 (1:0.5) ❌❌❌
• Win rate needed: 67% to be profitable — very hard!
Acceptable Setup (1:2 R/R) ✅:
• Stock: NIFTY (options)
• Entry: ₹120 (ATM CE premium)
• SL: ₹80 (33% premium loss)
• Target: ₹200 (67% premium gain)
• Risk = ₹40
• Reward = ₹80
• R/R = 2:1 (1:2) ✅
• Win rate needed: 34% — very achievable
Method 1: Tighter Stop Loss:
• Wider SL = worse R/R
• Tighter SL = better R/R (but more whipsaws)
• Use ATR: SL = 1-1.5 ATR (balance between tight and safe)
Method 2: Bigger Target:
• Don't exit at first profit
• Trail SL, let profit run
• "Your stop loss is your take profit's best friend"
Method 3: Better Entry:
• Buy at support (lower entry = tighter SL)
• Sell at resistance (higher entry = tighter SL)
• Patience = better entry = better R/R
Method 4: Partial Profit Booking:
• Book 50% at 1:2 R/R
• Trail SL on remaining 50% for 1:4+ R/R
• "Free trade" after first target hits
Mistake 1: "Win Rate Hi is Important":
• 80% win rate with 1:0.5 R/R = net LOSS
• 40% win rate with 1:3 R/R = net PROFIT
• R/R > Win Rate. Always.
Mistake 2: Booking Profit Early:
• Target set 1:2, but exit in fear at 1:0.5
• "Getting some profit, let's book"
• Result: average win = 0.5R, average loss = 1R = net loss
Mistake 3: Loss Chalana:
• SL hit, but "let's wait a little more"
• SL becomes -2R instead of -1R
• One -2R trade kills two +1R wins
Mistake 4: Not calculating R/R:
• "Chart looks good, let's take trade"
• trade without calculating R/R = gambling
• Always calculate R/R before entry
Mistake 5: Same R/R Expectation on Every Setup:
• Intraday: 1:1.5 is fine (fast trades)
• Swing: 1:2 minimum
• Positional: 1:3 minimum
• Adjust R/R based on timeframe
1:2 for swing trading. 1:3 for positional. 1:1.5 for intraday (with high win rate).
In options selling (high win rate 70%+ compensates). Or on very high probability setups. Avoid for beginners.
R/R is more important. 40% win rate + 1:2 R/R = profitable. 70% win rate + 1:0.5 R/R = losing.
Mark entry, SL, target on the chart using drawing tools. Use a risk-reward calculator (many available online). Record R/R of every trade in the trading journal.
Max 1-2% of total capital per trade. R/R based on price levels, but position size based on risk %.
Practice R/R on TRT: theretailtrader.org/charting Pro (100+ indicators + intraday): theretailtrader.org/pricing — ₹2,499/mo Telegram: @theretailtrader_in
Educational only. NOT investment advice.
This article is for educational purposes only. It is not a buy or sell recommendation, a claim of guaranteed returns, or advisory guidance. Exchanges, SEBI and RBI change rules, rates and procedures from time to time, so verify every figure with your broker or an official source.