What's the Risk Reward Ratio Formula in Forex?

Risk to Reward Ratio = (monetary value of your stop loss / monetary value of your take profit)

So if my stop loss is worth $10 and my take profit is worth $50, that is a 1:5 risk to reward ratio meaning I am risking $1 to make $5.

You should always risk less to make more.

Risk to Reward Ration formula is simply "Risk divided by Reward"

So, if you are entering a trade how much do you want to risk? If you are setting a stop loss to risk $10 then how much do you hope to profit from the trade?

If you hope to profit $40, then you set your take profit at a price where you will gain $40 when it is triggered.

The RR Ratio is then $10/$40 = 0.25 or you can express it as a ratio 1:4

An RR Ratio of 1:4 simply means that for every $1 you risk, you hope to profit $4, which is good.

As a rule of thumb, when you calculate your Risk to Reward, the result should be below 1, just like in our example where we had $10/$40 = 0.25

If your Risk to Reward is above 1, it means for every $1 you risk, you intend to make less than a dollar in profit which is bad.