A high reward-to-risk ratio lets you be wrong more often than you are right and still make money. This guide explains six rule-based ways traders look for that kind of setup, and how Forextity measures each one.
With a 1:3 reward-to-risk ratio you break even at a 25% win rate. With 1:1 you need 50%. That is why professionals plan the stop and the target before they enter. Every strategy below is built around a clear invalidation point (the stop) so the ratio can be measured honestly. See risk/reward ratios explained for the full math.
Price closes decisively through a level that held several times, then comes back to test it from the other side. Entry: just beyond the broken level on the retest. Stop: behind the level (about 0.8 ATR). Target: the next swing level, or three times the risk. Why it can give high RR: the stop is tight because the level is the invalidation. Common failure: a weak breakout candle that never retests, or a retest that closes back through the level.
In an uptrend the 21 EMA sits above the 50 EMA with price above both. Wait for a pullback of roughly 30–70% of the last leg into the EMA zone. Stop: below the pullback low. Target: the 127.2% extension of the last leg. Common failure: pullbacks deeper than 78% usually mean the trend is ending — see Fibonacci retracement explained.
A pin bar has a long wick and small body; an engulfing candle fully covers the previous one. Alone they are noise, but at a swing level or supply/demand zone they show rejection. Entry: a break of the signal candle. Stop: beyond its wick. Target: the next opposing level. See support and resistance explained.
Price closes above the highest high (or below the lowest low) of the last 20 candles. Stop: the tighter of the channel midpoint or three ATR. Target: the channel height projected from the entry (a measured move). Trend-following breakouts win less often but can pay several times the risk. Common failure: breakouts from very narrow, noisy channels.
The Asian session (about 00:00–05:00 UTC) is often quiet. When London or New York opens, price frequently breaks that range. Entry: at the edge on the retest. Stop: the range midpoint. Target: 1.5 times the range height. It needs an intraday chart. Related: session overlaps explained and ICT concepts, which treat the first break as a possible liquidity sweep.
Price makes a lower low but RSI(14) makes a higher low (bullish), or price makes a higher high while RSI makes a lower high (bearish). Momentum is fading even though price is stretching. Stop: beyond the second extreme. Target: the swing between the two points. Divergence is a warning, not a trigger — wait for a confirmation candle and a nearby level. Common failure: divergence can persist for many candles in a strong trend.
Every strategy has a checklist of conditions with different weights. The scanner adds up the ones that are met to give a 0–100 quality score and measures the reward-to-risk of the example entry, stop and target. A "Setup Radar" can scan ten popular markets at once for the strategy you choose. A high score means more conditions line up — it does not mean the trade will win.
Scan for these setups automatically. Pick a strategy and a trading style, then run the Setup Radar across ten markets.
Open the Strategy Scanner →Risk notice: educational content, not financial advice. Leveraged trading carries a high risk of loss. Read our Risk Disclaimer.
