What the ratio means
A 1:1 setup risks one unit to target one unit. A 1:2 setup risks one unit to target two units. A 1:3 setup risks one unit to target three units. The ratio is a plan for the trade, not proof that the target will be reached.
Examples in plain language
If a demo trader risks $50 and aims for $50, that is 1:1. If the target is $100 while the planned risk is $50, that is 1:2. If the target is $150 while risk remains $50, that is 1:3. Wider targets can require more patience and may be less likely to hit before price reverses.
Why win rate matters
A strategy with a larger target can still lose money if it rarely reaches that target. A smaller target can also be harmful if losses are large or discipline is weak. Ratio and win rate should be reviewed together in a demo journal.
Common beginner mistake
Beginners sometimes choose a high ratio because it looks attractive, then place stops and targets without market context. Support, resistance, volatility, spread, and session timing all affect whether the plan is realistic.