Check risk-reward before you enter — not after
A quick R-multiple check stops low-quality trades that feel good in the moment. Use expectancy, not win rate, as the filter.
Most bad trades are not mysterious. The stop and target were never defined, or the reward was smaller than the risk and nobody did the arithmetic.
If you only measure the result after the close, you are reviewing luck. The useful check is before entry.
Define three prices
- Entry — where you are willing to get filled
- Stop — where the idea is wrong
- Target — where you take profit or scale
No third price means you do not have a trade. You have a hope.
R-multiple in one line
Reward ÷ risk. A 2R idea risks $1 to make $2. A 0.5R idea needs a very high win rate just to break even — and challenge accounts rarely give you that many attempts.
Add win rate only after R is clear
Expectancy in R ≈ (win rate × average R) − (loss rate × 1). A 40% win rate at 2R can still be fine. A 70% win rate at 0.4R often is not.
Run the numbers with the free risk-reward calculator. If expectancy is negative, skip — even if the chart looks clean.
Tie it to challenge risk
A positive R setup still fails if it spends the whole daily loss budget. After R looks good:
- Size with the position size calculator.
- Confirm remaining room with the prop firm drawdown calculator.
Process first. Chart second. P&L last.