The risk-reward ratio compares what a trade risks to what it targets, usually written as something like 1:2 where the take-profit distance is twice the stop-loss distance. A higher ratio means fewer winning trades are needed to break even, but it does not make a target more likely to be reached. The ratio describes the shape of one trade; it says nothing about whether the entry has any edge.
Forex glossary
Risk-Reward Ratio
Related term
Drawdown
Drawdown is the fall in account value from a previous high to a later low, usually quoted as a percentage of the peak. A balance that moves from ten thousand to…
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