Risk & performance
Risk-reward ratio
Also known as: RR, R:R, reward-to-risk
The risk-reward ratio compares how much you stand to lose if a trade hits its stop versus how much you stand to gain at its target.
A 1:3 risk-reward means risking one unit to make three. Combined with win rate, it determines expectancy: a strategy can be profitable with a low win rate if its risk-reward is high enough. Algovex lets you set target risk-reward when defining exits.
Related terms
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