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The relationship between RR and win rate — no number means anything without looking at both together
Published by The Retail Trader · AUG 09, 2026 · Features
'Only take trades with a 1:3 risk-reward' — this advice is everywhere and on its own it is almost useless. Because RR means nothing until you also say how often that trade will win.
Risk-reward ratio means: compared to how much you are risking losing, how much you expect to earn. Entry 100, stop 95, target 115 — risk 5, reward 15, that is 1:3.
This is a number from a plan, not from an outcome. Reaching the target is not guaranteed, and this is where the trouble begins.
The win rate needed to break even:
• At 1:1 — you have to win more than 50%.
• At 1:2 — about 34%.
• At 1:3 — about 25%.
• At 1:5 — about 17%.
The reverse is also true: if your system wins 70% of the time, it is profitable even at 1:1. Very good systems run on small RR and very good systems run on big RR — there is no single 'right' number.
Placing the target far away makes RR look beautiful on paper. But a far target is less likely to be reached, and it is more likely that price comes back and hits the stop in between.
That is why a 1:5 trader often earns less than a 1:2 trader — the ratio is better but the hit rate falls so far that the math turns against them.
Expectancy = (win rate × average win) − (loss rate × average loss). If this is positive, the system makes money. If it is negative, no RR can save it.
So the next job is this: run this calculation on your last 50 trades. Most people find out for the first time what their system really is — because until then they were running only on memory.
Write down the RR before taking the trade, and after that move the target only by a trailing rule, not by hope. A trader who changes the target in a running trade makes their RR useless as a record — and is left with no data on their own system.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time at the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.