Understanding Risk–Reward in Futures Trading (Profit/Loss Ratio)

Recently, I shared a very basic rule when trading futures: Expected profit should be at least twice the risk. A simple example: If you accept a risk of 10 USD, then your profit target should be 20 USD or more. However, I was quite surprised to see many people misunderstanding this rule. Some think I’m talking about a 200% profit target — that’s not correct. So, let me clarify as follows 👇 Risk–Reward 1:2 Is Not 200% Profit Risk–reward doesn’t refer to the percentage increase of your account, but to the ratio between the amount you’re willing to lose and the amount you expect to earn on each trade. A specific example: You enter a trade with a volume of 1,000 USD You set a stop loss so that if you get wiped out, you lose 10 USD Then your minimum take profit should be 20 USD It’s that simple. Convert to Percentage for Easy Understanding If the stop loss is 1% away from the entry point Then the take profit should be at least 2% away That’s risk–reward 1:2. There’s nothing complicated or “superior” about it. Risk–Reward Doesn’t Guarantee You Win Every Trade It’s important to emphasize: a good risk–reward ratio doesn’t guarantee you always win. Losses are unavoidable in trading. But the key is: When you win, you win more When you lose, you lose less As long as you maintain discipline with a reasonable risk–reward, you can still achieve long-term profits, even if your win rate isn’t high. Final Message If you’re still learning and feeling confused, that’s completely normal. Everyone was once a beginner. The important thing is to understand the fundamentals correctly, without confusing profit percentage with risk/reward ratio. Learn step by step, maintain discipline on each trade. I’m always ready to accompany and share with you 🤝