R:R stands for “risk to reward,” and it is a measure of how much potential profit one stands to gain for every unit of risk taken on in a trade or investment. The specific R:R ratio that is required for a given win rate to be profitable can vary depending on the specific circumstances.
In general, a higher win rate will require a lower R:R ratio in order to be profitable, while a lower win rate will require a higher R:R ratio. This is because a higher win rate means that a greater percentage of trades will be profitable, so each trade can afford to have a lower potential profit. On the other hand, a lower win rate means that fewer trades will be profitable, so each trade needs to have a higher potential profit in order to make up for the losing trades.
For example, if a strategy has a win rate of 60% and an R:R of 1:1, it would need to have a profit of 60 pips for every 60 pips at risk in order to break even. If the strategy has a win rate of 40% and an R:R of 1:1, it would need to have a profit of 100 pips for every 100 pips at risk in order to break even.
It’s important to note that R:R is one of many factors that contribute to the overall profitability of a trading strategy. Other factors like position size, risk management, and trading costs will also play a role.