Stop distance vs target distance: what ratio actually works?
Posted: Tue Oct 27, 2026 5:37 am
Everyone repeats the same advice: at least 1:2 risk to reward. For scalpers, reality is messier.
A 1:2 ratio with a 4 pip stop and 8 pip target looks attractive. But spread and slippage eat a bigger slice of a small stop. The stop of 4 pips is effectively 3 if the spread is 1. The probability of reaching the 8 pip target is lower than the probability of hitting a 4 pip stop, so the required win rate depends on the real numbers.
Some profitable scalpers run inverted ratios, such as a 6 pip stop for a 3 pip target, with a high win rate. Others run roughly even. What matters is the combination of win rate and payoff after costs.
A table of historical trades by ratio shows the sweet spot for the specific strategy.
Consider two systems. System A: 5 pip target, 5 pip stop, 60% win rate. System B: 3 pip target, 6 pip stop, 75% win rate. After a 1 pip all-in cost per trade, System A nets 0.4 × (−6) + 0.6 × 4 = 0.0 pips per trade. System B nets 0.25 × (−7) + 0.75 × 2 = −0.25 pips per trade. A higher win rate lost to costs. Real numbers will differ, but the exercise shows why raw win rate is a poor guide.
What stop-to-target ratio has performed best in the journal, and does it match the textbook advice?
A 1:2 ratio with a 4 pip stop and 8 pip target looks attractive. But spread and slippage eat a bigger slice of a small stop. The stop of 4 pips is effectively 3 if the spread is 1. The probability of reaching the 8 pip target is lower than the probability of hitting a 4 pip stop, so the required win rate depends on the real numbers.
Some profitable scalpers run inverted ratios, such as a 6 pip stop for a 3 pip target, with a high win rate. Others run roughly even. What matters is the combination of win rate and payoff after costs.
A table of historical trades by ratio shows the sweet spot for the specific strategy.
Consider two systems. System A: 5 pip target, 5 pip stop, 60% win rate. System B: 3 pip target, 6 pip stop, 75% win rate. After a 1 pip all-in cost per trade, System A nets 0.4 × (−6) + 0.6 × 4 = 0.0 pips per trade. System B nets 0.25 × (−7) + 0.75 × 2 = −0.25 pips per trade. A higher win rate lost to costs. Real numbers will differ, but the exercise shows why raw win rate is a poor guide.
What stop-to-target ratio has performed best in the journal, and does it match the textbook advice?