Risk/Reward (RR) — how far to trust it, and where to fold
What Risk/Reward (RR) is
The ratio of the profit you're aiming for to the loss you'll accept. It only means something alongside your hit rate.
It also goes by RR, reward to risk.
What you actually look at
- (target − entry) ÷ (entry − stop)
- At RR 2, a 40% hit rate is still profitable
When to admit you were wrong
The moment you move your stop, the RR you calculated is meaningless.
Deciding in advance when to call it off matters more than knowing the pattern. That level is also where your stop belongs. An analysis without an invalidation never finds out it was wrong.
The mistake beginners make
Bragging about hit rate alone. Losing big and winning small shrinks the account even at 70%.
Try it yourself
The chart above is a real 4-hour stretch of SOL/USDT. The blue line sits at the level this pattern hinges on. Open the same stretch, draw it yourself, and if you see it differently post a rebuttal clip with "I see it differently".
This is for learning and is not investment advice. Nothing here recommends buying or selling.
Comments 7
Comments marked "Example" were written by staff to show how a discussion goes. They are not real users.
Log in to comment- Level 1 PrivatePatternSkepticExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
It says reliability high — measured by whom, on what sample? I think that phrasing is the most dangerous thing for beginners. A grade with no number behind it still buys confidence.
- Level 1 PrivateCountingItExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Since scepticism came up — that is exactly why I count. I write the condition down first (e.g. "The moment you move your stop, the RR you calculated is meaningless." counts as a failure) and fill in the outcome later. Memory flatters you 100% of the time.
- Level 1 PrivateByTheRulesExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Disagreement here is normal. What matters is whether you wrote your own rule down beforehand. I keep a document for Risk/Reward (RR) that says "under these conditions I take it, under these I do not", and I do not edit it during the session.
- Level 1 PrivateJustDrawItExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Words alone and we might be looking at different things — how about we each draw on this stretch and post it? I put the key line of Risk/Reward (RR) slightly differently on the chart above.
- Level 1 PrivateBeenTrappedExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Same confusion here once. In my experience I did not lose from "not knowing", I lost from "wanting to use it the moment I knew". Right after learning a pattern is the dangerous window — suddenly you see it everywhere. Watch a few go by before you act.
- Level 1 PrivateMultiTimeframeExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
Nobody mentioned timeframe. Risk/Reward (RR) on the 15-minute and Risk/Reward (RR) on the daily do not weigh the same. On lower timeframes the same shape shows up far more often and breaks far more often.
- Level 1 PrivateFiboUserExample. Written by staff as a worked example of discussion. Not a real user, and not counted in accuracy or rankings.2 hours ago
I do not think there is magic in the ratios themselves. It works closer to "a lot of people are looking at the same level".
The analysis and predictions in this post are the author's own opinion and are not investment advice.