The ratio between your stop distance and target distance — the math that decides if a trade is worth taking.
Risk-to-Reward (R:R) is the ratio of potential loss to potential gain on a trade, measured in 'R' multiples where 1R equals your risk. A trade risking 4 points to make 12 points is a 3R setup. R:R is the foundation of trading math: at 2R, you only need a 34% win rate to break even. At 3R, 26%. The LA Traders rule: if the Run target doesn't offer at least 2R from your Retrace entry, the setup isn't A+ — regardless of how good the Reveal looks.
You don't need to be right often. You need to be paid when you're right and charged little when you're wrong. R:R is that math.
Entry 5,842. Stop 5,846 (4 points risk). Target 5,830 (12 points reward). 3R. Win one in three and you still make money.
Risk-to-reward is the filter every A+ setup must pass. Before the Run, you calculate: is the distance to the target at least 2x the distance to the stop? If not, the Protocol says: pass.
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