Risk/Reward Ratio
Why a 1:2 risk/reward ratio can make you profitable even when you lose more than you win.
The simple version
Risk/reward ratio compares how much you stand to lose if a trade goes wrong to how much you stand to gain if it goes right.
A 1:2 ratio means: risk $1 to potentially make $2.
Why this changes everything
With a 1:2 risk/reward ratio, you only need to be right 34% of the time to break even. You can lose two out of three trades and still come out ahead.
This is why professional traders obsess over risk/reward before entering a trade — not just whether they think the stock will go up.
How it is measured on each signal
Every signal shows a risk/reward ratio calculated as:
(Target Price − Entry Price) ÷ (Entry Price − Stop Price)
TradeMind AI only issues signals with a minimum 1.5:1 ratio. Signals below this threshold are rejected, even if the AI has conviction — because the math doesn't justify the trade.
In practice
A signal with Entry $100, Stop $97, Target $106 has a risk of $3 and a reward of $6 — a 1:2 ratio. You are risking 3% to potentially make 6%.
See it in action
Every TradeMind AI signal shows confidence score, entry, stop, target, and R-multiple — all explained with tooltip hints when you hover the term.