Risk-reward ratiokitna risk lekar kitna target

The risk-reward ratio compares the loss you accept on a trade with the profit you are aiming for. If you buy SBI at ₹800 with a stop loss at ₹790 and a target at ₹820, you risk ₹10 to make ₹20, a ratio of 1:2. The ratio matters because it works together with win rate. At 1:2, you can be wrong more often than right and still come out ahead; winning 40% of the time yields 40 × 20 minus 60 × 10, which is positive before costs. At 1:0.5, risking ₹10 to make ₹5, you must win over two-thirds of your trades just to break even. Many beginners unknowingly trade poor ratios by taking small profits quickly and letting losses run. Decide the stop and target before entering, write them down, and reject setups where the reward does not justify the risk.