How it works
Target price = entry × (1 + target return). Stop price = entry × (1 − stop-loss %). Reward-to-risk = target return ÷ stop-loss %.
Reading reward-to-risk
A ratio of 2 means a winning trade earns twice what a losing trade loses, so you can be profitable even with a win rate below 50%.
What to keep in mind
Actual orders must match the tick size, and in a sharp drop fills can come in below your stop. Fees and taxes are not included.