Risk/reward take profit derives the target from the stop distance.
A ratio: 2.0 means the target is 2x the stop distance away - a
classic "2R" target.
Shape
"take_profit": {
"type": "risk_reward",
"ratio": 2.0
}Params
ratio- target-to-stop distance ratio.
Target price
- Long:
entry + (entry - stop_price) * ratio - Short:
entry - (stop_price - entry) * ratio
Usage
The cleanest way to enforce a specific expected R-multiple on every trade. Pairs with any stop type - the target updates automatically if the stop logic changes.
Pitfalls
- High R:R = lower win rate. A 3R target requires fewer winners to be profitable, but those winners need to actually materialize.
- R:R alone says nothing about edge. A strategy with 3R targets and a 20% win rate has expectancy 30.2 - 10.8 = -0.2 - losing.