The math of expectancy.
- Risk: The amount you lose if the stop is hit.
- Reward: The amount you gain if the target is hit.
- Expectancy: The average amount you expect to win or lose per trade.
The power of 1:2.
With a 1:2 Risk-Reward Ratio, you only need to win 34% of your trades to break even. If you win 40% of the time—which is very achievable—you are consistently profitable.
Compare this to a 1:1 ratio, where winning 40% of the time leads to a slow account drain. RRR is the ultimate safety net for your trading psychology.
Why high RR helps survive losing streaks.
Every trader, including the best in the world, will have losing streaks. If you risk 0.5% per trade with a 1:3 RR, a single win recovers three full losses. This prevents you from reaching the 'danger zone' of your daily drawdown.
It also reduces 'revenge trading' because you know one good setup can fix the day's losses.
Prop firm application: Protecting the floor.
At MixFunded, your daily drawdown is 3% of the starting balance of the day. If you take three trades at 1:2 RR risking 0.5% each, even if the first two lose, the third win puts you at +0.5% for the day.
Focusing on RRR rather than 'perfect entries' is how you pass evaluations and maintain funded status without stress.