R:R = distance to the stop : distance to the take profit. Both come from the chart.
At 1:2 about one winner in three breaks even before costs; at 1:1 you need one in two.
Set the target at the next level. A ratio you want is not a ratio the chart offers.
How to calculate it
Take an EURUSD buy at 1.0840 with the stop at 1.0815 and the take profit at 1.0890. The stop is 25 pips away and the target 50 pips. The ratio is 25 : 50, or 1:2.
In dollars the sum is the same. At 0.20 lots and $10 per pip per lot, the stop costs $50 and the target pays $100. The order ticket shows both: the money at the stop and the money at the take profit, as soon as you add them.
Traders often describe results in R, where 1R is the amount risked. A win at 1:2 is +2R; a full stop is −1R.
Win rate and break-even
The ratio decides how often you need to be right just to break even, before spread and commission.
| R:R | Win | Loss | Break-even |
|---|---|---|---|
| 1:1 | +$50 | −$50 | About one win in two trades |
| 1:2 | +$100 | −$50 | About one win in three trades |
| 1:3 | +$150 | −$50 | About one win in four trades |
A higher ratio needs fewer winners, but price reaches a far target less often. There is no free lunch: the ratio and the win rate trade off against each other. What matters is the pair, measured over many trades in your journal.
A realistic target
The take profit should come from the chart, usually the next resistance for a buy or the next support for a sell. If you buy at 1.0840 and resistance sits at 1.0865, the honest target is about 25 pips: a 1:1 trade with a 25-pip stop.
You have three choices then: accept 1:1, look for a better entry that tightens the stop, or skip the trade. Moving the target past resistance to “make” 1:2 changes the number, not the odds. Many traders set a minimum, such as 1:1.5, and skip anything below it.
Write the minimum into your plan before the session. In the moment, almost any trade can be made to look like 1:2 by moving one line on the chart.
R:R and your dollar limits
On a $10,000 1-Step Challenge account at 0.5% risk, 1R is $50. The daily loss limit is $500, so it takes 10 full stops in a row to reach it, and 20 to use the whole 10% overall loss limit.
A fixed 1R keeps those numbers predictable. Raising the size after a loss to win it back at 1:2 changes 1R mid-plan, and it is one of the quickest ways to reach a limit. Keep 1R fixed for the week and judge the ratio in your journal, not trade by trade.
Set it in the ticket
- Press + Stop loss and + Take profit.
- Enter each as a price, in points or in dollars, whichever matches how you planned it.
- Read the money at the stop and at the take profit, and check the ratio against your minimum.
- Open Order value & limits to see the commission, which comes off every result.
Quiz
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Trading basics in the MyFundedCapital Terminal checklist
Rules as of 17 Oct 2026. Tick each line before your next session.
1. What is the difference between market, limit and stop orders?
- A market order buys at the ask and sells at the bid, so you pay the spread the moment you enter.
- A limit waits for a better price; a stop waits for price to prove a move. Neither is sure to fill.
- Add a stop loss before you send any order; the ticket shows what it costs against both loss limits.
2. How do you read a price chart?
- Each candle is one period: its body runs from open to close, its wicks to the high and low.
- Read top-down: direction on 1D or 4h, structure on 1h, entry on 15m or lower.
- Your planned stop shows on the chart as a line, so you see the risk before you send.
3. Which candlestick patterns should a beginner know?
- Body = open to close, wicks = the extremes. Long wicks show where price was rejected.
- A pattern counts only after its candle closes, and only at a level you marked earlier.
- Put the stop beyond the pattern’s wick and size the trade from that distance.
4. What are support and resistance levels?
- Mark levels on 1D and 4h first; they carry more weight than levels found on 1m.
- A broken resistance often turns into support on the retest, and the other way round.
- Stops go beyond the zone with a buffer; a stop on the line is where many others sit too.
5. How do you identify a trend in trading?
- Structure first: higher highs and higher lows up, lower highs and lower lows down.
- The higher timeframe sets the direction; the lower one only times the entry.
- A break of the last higher low puts an uptrend in question; it does not prove a reversal.
6. What are moving averages and how do you use them?
- The period counts candles, not days: a 50 EMA on 1h averages the last 50 hourly closes.
- Use the slope for direction and the line as a zone in pullbacks, not as a precise signal.
- Moving averages lag. Your stop still goes beyond structure, never just past the line.
7. What is the RSI indicator and how do you read it?
- RSI measures momentum, not value. “Overbought” is not a sell signal by itself.
- In an uptrend RSI tends to hold above the middle; in a downtrend below it.
- Use RSI to confirm a setup at a level in the trend direction, never alone.
8. What is the MACD indicator and how does it work?
- Above zero, the faster average is above the slower one: the trend leans up. Below zero, down.
- A shrinking histogram warns that momentum is fading before a crossover appears.
- MACD is built from moving averages, so it confirms; it does not predict.
9. How do you use the ATR indicator to set a stop loss?
- ATR measures how far price usually moves per candle. It says nothing about direction.
- A stop tighter than one normal candle is often hit by noise, not by a failed idea.
- When ATR rises, the stop widens and the volume shrinks. The dollars at risk stay the same.
10. How do you confirm a trading signal before you enter?
- A signal needs context, location and a trigger. One of the three alone is a guess.
- Use one tool per job; three oscillators agreeing are one opinion, not three.
- Expert advisors and trading bots are allowed only by agreement: write to support first.
11. What is the risk-reward ratio in trading?
- R:R = distance to the stop : distance to the take profit. Both come from the chart.
- At 1:2 about one winner in three breaks even before costs; at 1:1 you need one in two.
- Set the target at the next level. A ratio you want is not a ratio the chart offers.
12. Where should you place a stop loss?
- The chart sets the stop’s place; your risk per trade sets the size. Never the other way round.
- Every order should carry a stop; the ticket warns when the loss is not limited.
- Move a stop only in your favour, and only for a reason on the chart.
13. How do you size a position in the MyFundedCapital Terminal?
- Size from the stop and a fixed risk; the volume is the result, not the starting point.
- Risk % mode sizes from a share of equity and shows Risk at SL before you send.
- Fit to limits is a ceiling. Your own risk per trade is usually far below it.
14. What should you record in a trading journal for every trade?
- Write the reason before you enter; reasons written afterwards tend to fit the result.
- Measure results in R, so trades of different sizes and markets compare fairly.
- Review once a week on a day you are not trading, and change one thing at a time.
15. How do you place your first trade step by step?
- Rehearse in the free demo: live prices and the real rules, no sign-up, orders switched off.
- Plan on the chart first; open the ticket only when entry, stop and target are clear.
- Read Risk at SL and the daily and overall limits before and after, then send.
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Questions
Is a higher risk-reward ratio always better?
No. A far target is hit less often. A ratio is only useful together with the win rate it produces, which you measure over many trades.
Do costs change the ratio?
Yes. Spread and commission reduce every win and add to every loss, so a 1:1 plan needs slightly more than one win in two to break even.
Related lessons
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