The size of the loss you accept if wrong compared with the gain you expect if right.
Last verified 13 September 2026 · written by the DexLadder team
What it means
The size of the loss you accept if wrong compared with the gain you expect if right.
Why it matters when you trade
Combined with your hit rate it produces expectancy, which is the only number that says whether a strategy makes money. A 2:1 ratio breaks even at a 33% win rate; 3:1 breaks even at 25%. This is why "I am right most of the time" is not a strategy and why a system that is wrong two times in three can compound beautifully.
Worked example
Expectancy = (win rate × reward) − (loss rate × risk). At 40% and 3:1 → (0.4 × 3) − (0.6 × 1) = +0.6R per trade.
See it on live markets
DexLadder runs risk-reward ratio against live market and pool data, with simulated capital, so you can watch it act on an order instead of reading about it — no account, no wallet, nothing installed.