Tofffx

The RR ratio is the difference between the potential loss and the potential profit of your trade. You simply divide the pips number you expect to win by the pips number you expect to lose.
Assume that you place an order with a TP at 50 pips and a SL at 100 pips then your RR ratio will be 0.5 which means that you will need to win 2 trades to recover the loss of 1 trade.
Now assume that you place an order with a TP of 100 pips and a SL of 50 pips then your RR will be 2 which means that you will need to win only 1 trade to recover the loss of 2 trades.
Never take a trade if your risk/reward ratio is below 1.
A RR of 2 and more is one of the key to become successful in trading on a long run. Imagine the insane performance it would be, if every trade you make had a RR of 2 with 70% of winning trades! Not even going to talk above 1:2 RR. Calculate it yourself. Mine risk reward is never under 3-4.

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