ForexFin
ForexFin
R-multiple, pips at risk, pips at reward — from entry, stop, and target.
A EUR/USD long at 1.0850 with a stop at 1.0820 and a target at 1.0920 is a 1 : 2.33 risk-to-reward trade — 30 pips of risk for 70 pips of reward. At that ratio the breakeven win rate is ~30%: risk ÷ (risk + reward) = 30 ÷ 100. Any hit rate above 30% is profitable over enough trades, before costs.
R-multiple is reward divided by risk. A 1:2 setup means you stand to gain twice what you risk if the target is hit before the stop.
The breakeven win rate tells you how often the trade has to work for the strategy to be profitable in the long run, ignoring fees:
breakeven% = risk ÷ (risk + reward)
A 1:2 setup needs only ~33% wins to break even. A 1:1 needs 50%. A 2:1 (asymmetric losers) needs ~67% — which is why scalpers with thin targets need very high hit rates.