Risk/Reward Ratio in Trading
Risk/reward ratio determines whether a strategy is profitable even with a 50% win rate. Most retail traders ignore it. Every Tidava signal includes implicit R:R targets.
What is risk/reward ratio?
R:R = distance from entry to target ÷ distance from entry to stop loss.
Example: Entry $100, Stop $97, Target $109
Risk = $3, Reward = $9 → R:R = 3:1
Minimum acceptable R:R by strategy
| Strategy | Win Rate | Min R:R needed |
|---|---|---|
| Trend following | 40% | 2:1 |
| Mean reversion | 65% | 1.2:1 |
| Breakout | 35% | 3:1 |
| Scalping | 60% | 1.5:1 |
How Tidava uses R:R
Every Tidava signal fires at points where the historical regime data supports a minimum 2:1 expected R:R. Low-conviction signals are suppressed — not sent — when the setup doesn't meet the threshold. This is why Tidava produces fewer signals than competitors but with higher quality.
See signals with built-in R:R targeting →