7:1 Risk-Reward Ratio Rule
The 7:1 Risk-Reward Ratio Rule reflects how a trader handles risk. This rule means that your stop loss (risk) must not exceed your take profit (reward) by more than seven times. The actual drawdown and the result of each position are taken into account.
For example, if the drawdown on an open position was $1,000 but you ended the trade with a profit of $100 (a 10-to-1 ratio), the rule is violated.
You can check the risk value for closed positions in market watch → start → statement → positions → risk.
This metric is calculated within one hour after the position is closed.
The calculation is based on the formula: Drawdown / P&L = Risk.
The Risk parameter (risk-to-reward ratio) must not exceed 7.
In case of payout request denial because of this rule, the trader will need another 5 winning days to be eligible for a payout again.
The essence of this rule is that the risk taken by a trader should be justified by the outcome. If a trader suffers large drawdowns on positions and then takes a small profit (when risk exceeds profit by more than seven times), this may violate the rules. We want traders to use an adequate risk-management system to avoid chaotic and random results.
Trades that break this rule may result in a denial of payout. If a trader has several trades with a risk-reward ratio exceeding 7, for example when closing a position at breakeven, before news, or at the end of a session, this alone will not be a problem. But if such behaviour is systematic, the payout request can be denied. At the same time, particular attention is paid to trades with large drawdowns in absolute dollar terms.
The decision-making process takes into account whether stop-loss orders were used. The use of a daily loss limit as a substitute for an actual stop-loss (i.e. relying on the daily loss limit without having a real stop-loss order placed) will negatively affect the payout decision.
Example:
A trader works with a $2,000 stop loss and a $4,000 take profit. After opening the position, the unrealized result is –$1,000. Then the price moves back above the entry level and the trader closes the position with a +$100 profit. The actual risk-reward ratio for this trade is $1,000 / $100 = 10, which exceeds the maximum allowed value of 7.
We recommend using bracket orders when opening a position so that you can immediately see the exact risk-reward ratio when setting your stop loss and take profit levels. The ratio must not be higher than 7.
For example, if the drawdown on an open position was $1,000 but you ended the trade with a profit of $100 (a 10-to-1 ratio), the rule is violated.
You can check the risk value for closed positions in market watch → start → statement → positions → risk.
This metric is calculated within one hour after the position is closed.
The calculation is based on the formula: Drawdown / P&L = Risk.
The Risk parameter (risk-to-reward ratio) must not exceed 7.
In case of payout request denial because of this rule, the trader will need another 5 winning days to be eligible for a payout again.
The essence of this rule is that the risk taken by a trader should be justified by the outcome. If a trader suffers large drawdowns on positions and then takes a small profit (when risk exceeds profit by more than seven times), this may violate the rules. We want traders to use an adequate risk-management system to avoid chaotic and random results.
Trades that break this rule may result in a denial of payout. If a trader has several trades with a risk-reward ratio exceeding 7, for example when closing a position at breakeven, before news, or at the end of a session, this alone will not be a problem. But if such behaviour is systematic, the payout request can be denied. At the same time, particular attention is paid to trades with large drawdowns in absolute dollar terms.
The decision-making process takes into account whether stop-loss orders were used. The use of a daily loss limit as a substitute for an actual stop-loss (i.e. relying on the daily loss limit without having a real stop-loss order placed) will negatively affect the payout decision.
Example:
A trader works with a $2,000 stop loss and a $4,000 take profit. After opening the position, the unrealized result is –$1,000. Then the price moves back above the entry level and the trader closes the position with a +$100 profit. The actual risk-reward ratio for this trade is $1,000 / $100 = 10, which exceeds the maximum allowed value of 7.
We recommend using bracket orders when opening a position so that you can immediately see the exact risk-reward ratio when setting your stop loss and take profit levels. The ratio must not be higher than 7.
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