The short answer
A 1:1.5 risk-reward ratio means you risk one unit to make one and a half, so a trade that risks $100 to its stop-loss targets $150, and the break-even win rate at that ratio is 40%. The number after the colon is the reward expressed as a multiple of the risk, which makes 1.5 a gain of one and a half times whatever you put on the line.
The 40% figure is the share of trades you need to win just to avoid losing money, before costs, and it comes straight out of the break-even formula. I explain the ratio, the math, and how 1:1.5 stacks up against the neighbouring ratios on this page, and you can run the numbers on your own trade with the risk-reward calculator.
What a risk-reward ratio actually is
A risk-reward ratio compares the amount a trade can lose to the amount it can make, expressed as risk to reward. A 1:2 ratio risks one to make two, a 1:3 risks one to make three, and a 1:1.5 risks one to make one and a half, where the first number is always normalised to one.
In plain trading terms, the first number is the distance from your entry to your stop-loss, and the second number is the distance from your entry to your take-profit. A trade that enters at 1.1000, stops at 1.0990 for a 10-pip risk, and targets 1.1015 for a 15-pip reward is a 1:1.5 trade, because the 15-pip target is one and a half times the 10-pip risk.
I treat the ratio as a property of the trade setup rather than a preference, because it is set by where the stop and target sit, and those levels should come from the market structure rather than from a number the trader liked.
The break-even math for a 1:1.5 ratio
The break-even win rate is the winning percentage at which a strategy neither makes nor loses money, and for a 1:1.5 ratio it is 40%. The formula is one divided by one plus the reward multiple, which here is one divided by 2.5, giving 0.40.
Worked in dollars, the logic is that ten trades at a $100 risk produce four winners at $150 each and six losers at $100 each. The four winners make $600, the six losers lose $600, and the net is zero, which is the break-even point at a 40% win rate.
I memorise the formula rather than the answer, because the same one-divided-by-one-plus-reward logic gives the break-even rate for any ratio, and it is the single most useful number in trade planning. Every target you set implies a break-even win rate, and knowing it tells you whether your real edge clears the bar.
How 1:1.5 compares to the neighbouring ratios
The break-even win rate falls as the reward multiple rises, because each winner covers more losers. The comparison across the common ratios shows why a trader might accept a lower win rate in exchange for a bigger payoff per win.
| Risk-reward ratio | Break-even win rate | What it implies |
|---|---|---|
| 1:1 | 50% | You must win half your trades |
| 1:1.5 | 40% | Win 4 in 10 to break even |
| 1:2 | 33% | One in three winners pays |
| 1:3 | 25% | Win a quarter of trades to flat |
The table is the whole trade-off in three columns, and the move from 1:1 to 1:1.5 drops the break-even win rate by ten percentage points, which is a large improvement for a small increase in target. The further move from 1:1.5 to 1:2 drops it by only seven points, and from 1:2 to 1:3 by eight, so the easiest win-rate relief comes from the first step above 1:1.
Why 40% sounds easy and is not
The trap in a 40% break-even is that it sounds achievable, because most traders assume they win more than four times in ten. The reality is that the win rate has to clear the break-even after costs, and spreads, slippage, and commissions push the effective bar higher than the raw ratio suggests.
A strategy that wins 42% of trades at a clean 1:1.5 looks profitable on paper and loses money in practice, because the costs of the 58% losers and the reduced net on the winners erode the thin edge. The honest test is the live win rate after every cost, not the backtest win rate before them.
I build the cost into the target rather than hoping it away, because a 1:1.5 ratio that becomes 1:1.3 after spread and commission needs a much higher win rate to survive. The sizing that keeps the risk constant as the ratio shifts is covered in the guide to volatility-based position sizing.
When a 1:1.5 ratio makes sense
A 1:1.5 ratio fits strategies that take a lot of trades and win often enough to stay above the 40% bar, because the modest target is more likely to fill than a distant one. Short-term and intraday strategies tend to favour ratios in the 1:1 to 1:2 range, since their moves are smaller and faster.
A higher ratio, like 1:3 or beyond, fits strategies that win less often but run trends when they do, because the occasional large winner carries the many small losers. The choice between 1:1.5 and a higher ratio is really a choice about strategy type, not about ambition.
I match the ratio to the setup the market is offering, because forcing a 1:1.5 target onto a trend-following setup truncates the winner, and forcing a 1:3 target onto a scalp guarantees it never fills. The support and resistance framework is where the stop and target that set the ratio actually come from.