RR (Risk-Reward Ratio)

RR can veto a setup on its own. It compares the distance from entry to stop (your risk) against the distance from entry to target (your reward). Everything else is context. This is arithmetic. ### The formula the 1.7 floor comes from The breakeven win rate for any RR is **1 / (1 + R)**. Tradeciety's [reward-risk guide](https://tradeciety.com/how-to-use-reward-risk-ratio-guide) walks the same maths: at 3:1 you need to win 25 percent of the time just to stay flat, at 1:1 you need 50 percent. Run our floor through it. 1 / (1 + 1.7) is 1 / 2.7, or just over 37 percent. That is what the 1.7 minimum really means: a setup that only pays if you are right more than roughly 37 percent of the time. Not a genius win rate. Not a coin flip you need to beat by miles. But nothing about the ratio hands you that win rate, it only sets the bar the setup has to clear. And that is *before costs*. Spread on the way in and out, commission on an ECN account, negative slippage on a news candle. Real breakeven always sits a little above the theoretical one, which is another reason the floor is set with headroom rather than at 1:1. ### Why a bigger RR is not automatically better Here is what the RR tables never print: **RR and win rate are not independent variables.** You cannot dial one without moving the other. - Push the target further out and price has to travel further to pay you, so it gets there less often. - Pull the stop in tighter to inflate the ratio and ordinary noise takes you out more often. Tradeciety states it directly: the closer the stop, the lower the win rate, because it is easier for price to reach it. So a 1:10 setup is not ten times better than a 1:1. It is a different bet with a much lower hit rate already baked in, and the ratio on the screen hides that. Which is why RR is a *filter*, not a target. It tells you whether a setup is worth risking money on. It cannot make a bad setup good. ### How traders fake it The expensive habit is manufacturing RR after the fact, so the screenshot passes: - Placing the stop inside protected structure so the ratio "works" - Dragging TP past the real weak-structure target until it prints 1.7 - Measuring RR from the entry you wanted rather than the fill you got All three produce a good-looking number and nothing in the account. In this system, RR is measured off levels the chart hands you, never levels you need: stop covering protected structure by 2 pips, target at weak structure on your setup timeframe class. If those two honest levels do not clear 1.7, there is no trade. That is the whole point of a floor. It is not a preference you flex on a setup you really like, it is the thing standing between you and a journal full of trades that all looked beautiful.