Free course · Lesson 12 of 14

Stop loss, target and R

Risk 1 to make 3: the maths that makes it work.

Step by step

1. You sell here. Before anything else, decide where you’re wrong.
2. The stop loss is your exit if you’re wrong. Here it’s 10 pips above. That distance is 1R: the amount you’re risking.
3. The target is three times further away: 30 pips. You risk 1 to make 3. That’s a 1:3 trade.
4. If it works, you make 3R. If it doesn’t, you lose 1R. That’s the deal, every single trade.

Remember: R is what you risk. Aim for 3R. Never move your stop further away to avoid a loss.