To The Moon

Most new traders treat trading like a school exam—they think if they aren't right 80% or 90% of the time, they are failing. This belief causes beginners to hold losing trades forever just to avoid taking a loss and ruining their "win rate."

Here is the secret: Win rate doesn't determine profitability—Risk-to-Reward Ratio (R:R) does.

What Is Risk-to-Reward Ratio?

Your Risk-to-Reward Ratio measures how much money you stand to lose versus how much money you stand to gain on a single trade.

• 1:1 R:R: You risk $10 to make $10.

• 1:2 R:R: You risk $10 to make $20.

• 1:3 R:R: You risk $10 to make $30.

The 10-Trade Math Experiment

Assume you take 10 trades risking $20 per trade with a 1:3 Risk-to-Reward Ratio. You have a terrible week and lose 6 out of 10 trades (a 40% win rate).

Even though you were wrong most of the time, you still walked away with a +$120 profit.

Why High Win Rates Are Often a Trap

Some strategies advertise a "90% Win Rate." What they don't tell you is that they risk $100 to make $10 (a 10:1 inverse R:R).

1. You win 9 trades in a row: +$90 profit.

2. You lose just 1 trade: -$100 loss.

3. Net Result: You are down -$10 despite a 90% win rate.

3 Actionable Rules for Your Strategy

1. Never take a trade below 1:2 R:R. If your stop-loss is 20 pips/points away, your profit target must be at least 40 pips/points away.

2. Set your target before entering. If the chart doesn't offer enough room for a 1:2 payout before hitting major resistance, skip the trade.

3. Embrace small losses. Taking a $10 loss according to your plan is a successful trade execution.

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Question for the forum: What R:R target do you usually aim for on your setups—1:1, 1:2, or higher?