Trading metric
Risk-reward ratio
The risk-reward ratio compares what you stand to make against what you are risking on a single trade. It is the one number you can know before you click buy — and the one most traders quietly let slip after they do.
What it is
The risk-reward ratio is the distance from your entry to your target divided by the distance from your entry to your stop. A trade that risks one unit to make two has a 2:1 risk-reward ratio. It is a planning metric: it describes the trade you intend to take, not the trade you ended up with.
It matters because profitability is the product of two numbers, not one. A ratio of 2:1 only needs to win about a third of the time to break even; a ratio of 0.5:1 needs to win two times in three. Risk-reward and win rate are the two halves of expectancy, and a trader who ignores either one is flying on half the instrument panel.
The ratio is only honest if the stop and target are real — levels you will actually act on, placed where the trade thesis is proven wrong or complete. A 5:1 ratio drawn to a target price that never gets hit is not a good ratio, it is a wish.
How to measure it
Measure the planned ratio before you enter, from the three prices that define the trade. Then measure the realized ratio after you exit, because the two are rarely identical.
Risk-reward ratio = (target − entry) ÷ (entry − stop) [for a long]
- 1
Mark your entry price — where you actually get filled, not where you hoped to.
- 2
Mark your stop: the price that proves the trade idea wrong. The risk leg is the distance from entry to stop.
- 3
Mark your target: the price where the move is reasonably complete. The reward leg is the distance from entry to target.
- 4
Divide reward distance by risk distance. Express it as a ratio to one (for example, 2.5:1).
- 5
After the trade closes, recompute with your actual exit to get the realized ratio, and compare it to the plan.
Worked example
You buy at 100.00, set a stop at 99.00, and a target at 102.50. The risk leg is 1.00 and the reward leg is 2.50, so the planned ratio is 2.5:1. You exit early at 101.00 out of nerves: the realized ratio is 1:1. Same setup, different discipline — and the gap between 2.5:1 and 1:1 is exactly the behavior a review is meant to surface.
What good looks like
There is no universal "good" ratio, because the right ratio depends on how often the strategy wins. The useful target is a ratio that, paired with your real win rate, produces positive expectancy with margin to spare. Scalpers can run profitably below 1:1 on high win rates; swing traders often need 2:1 or better because they win less often.
What is universally bad is a realized ratio that drifts well below the planned ratio. That gap is almost never the market — it is stops widened in the moment and winners cut early, and it is the single most common way a sound plan loses money.
Below 1:1
Only viable with a genuinely high win rate. Fragile: one widened stop erases several wins.
1.5:1 to 3:1
The common working range for discretionary day and swing trading. Forgiving of a moderate win rate.
Plan vs realized gap
The number that actually predicts results. If realized trails planned, the leak is behavioral, not strategic.
What moves it
Moving the stop to avoid being wrong
Sliding the stop further out turns a 2:1 trade into a 1:1 trade in real time. The position feels saved; the ratio is quietly destroyed. This is the most expensive habit in trading and the easiest to deny without a record.
Taking profit early
Closing at half the planned target feels responsible and ruins the math. Cut enough winners short and even a high win rate cannot carry the account, because the reward leg never gets paid in full.
No predefined target
Without a target set before entry, "reward" becomes whatever the screen happens to show when you get nervous. You cannot manage a ratio you never defined.
Entering late
Chasing an entry above the planned trigger shrinks the reward leg and stretches the risk leg at the same time, degrading the ratio from both ends before the trade has even moved.
How Mettle tracks it
Mettle reads the ratio from the plan you log and the fills you import, so the planned-versus-realized gap stops being a feeling and becomes a number you can review.
Each trade page holds your entry, stop, and target, so the planned ratio is computed from what you intended, not reconstructed after the fact.
Imported fills give the realized exit, so the dashboard can show planned versus realized side by side across your history.
When realized trails planned, the session review prompts you to tag why — moved stop, cut early, chased entry — so the ratio links back to the behavior that moved it.
Those tags are self-reported, and the review says so: Mettle counts the patterns you name, it does not infer your intent from the chart.
FAQ
Is a higher risk-reward ratio always better?
No. A higher ratio usually comes with a lower win rate, because more ambitious targets get hit less often. The ratio is only "good" relative to how often the setup actually wins — the two numbers have to be judged together through expectancy, never in isolation.
Should I use the planned or realized ratio?
Both, and the gap between them is the point. The planned ratio grades your trade selection; the realized ratio grades your execution. A consistently large gap is a discipline problem that no change of strategy will fix.
Does Mettle calculate this automatically or do I report it?
The number itself is arithmetic on your logged fills, so Mettle computes it for you on the dashboard. What stays self-reported is the behavioral side — the tags and execution notes you add in review — because only you know whether you followed the plan. The copy never pretends otherwise.
Is Mettle free to start?
Yes. You get full access free for 14 days with no card. We only ask for a card once you have reviewed three sessions — after the product has proven it earns a place in your routine.
See your planned vs realized ratio
Log the plan, import your fills, and Mettle shows where your exits drift from your intent — with a review loop that names the habit behind the gap.
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Want the workflow behind the numbers? Read the matching guide.