How much you earn for every dollar you risk: 2.46 means two and a half times.
What this ratio is
Reward-to-Risk Ratio (R:R · Risk/Reward Ratio) compares what you accept losing with what you hope to gain: entry at $100 with a stop at $97 and a target at $109 means risking $3 for a reward of $9, a ratio of 1:3. It is the unit for judging whether any trade is worth taking before it exists.
The survival equation
The ratio and the hit rate are two faces of one coin: at 1:3 you need only a 25% hit rate to break even and 35% for a healthy profit, while at 1:1 you always need more than half. Surviving traders are often wrong more than people think. Their ratios carry them, not their hit rates.
The condition for honesty
The ratio is only true if both ends are true: a sensible stop behind a real level (not a pretty number) and a target built on a reachable structure (a wall, an expected range), not on wishing. A 1:5 ratio with a fantasy target is an accounting lie that tempts and doesn't pay.
Hypothetical example
A bounce setup off a put wall: entry $150, stop logically below the wall at $147, and the target is the call wall at $159. A ratio of 1:3 with two honest structural ends. If the upper wall were at $153, the ratio would be 1:1 and the same trade would not be worth taking.
Common mistake
Improving the ratio by choking the stop: pulling the stop in where it makes no sense flatters the number and guarantees getting hit by noise. An excellent ratio with a dead stop is worse than an ordinary ratio with a live one.
The condition for honesty
It is built from real levels: a stop behind a level that truly invalidates the idea and a target at resistance that can be reached in the time allowed. Tightening the stop to flatter the ratio creates a paper 1:5 that is hit before the idea works. Pick the ratio from the market; don't fabricate it in the calculator.
Where to see it on the platform
The trading journal calculates it automatically from your inputs and refuses to log a trade without both ends. The institutional signal model shows it for every published idea.
The signal model calculates it automatically from the levels, and the trading journal compares the planned ratio with the achieved one.
