Level 6 · Lesson 7
Target Selection
& Risk:Reward
Know where you are going before you enter. Your target method determines your win rate, your expectancy, and your psychology.
First — Why This Matters
🔍 The Destination Before the Journey
You would never start driving without knowing your destination. Yet most traders enter trades without knowing where they will exit. They “see how it goes.” That is the trading equivalent of driving randomly and hoping you end up somewhere good.
Your target is half of the R:R equation. Together with your stop (Lesson 6.6), it determines your expected value per trade. Get both right and you have a mathematical edge. Get either one wrong and you are gambling with a spreadsheet.
🔎 REAL SCENARIO
A trader had a 45% win rate with 1:1 targets and was losing money. He switched to 1:2 targets with partials — same setups, same entries, same stops. His win rate dropped to 38% but his account grew +£4,200 in 3 months. The maths: (0.38 × £200) − (0.62 × £100) = +£14/trade. R:R turned a loser into a winner.
01 — 3 Target Methods
Same Entry, Different Exits
Watch the same trade exit at three different points depending on the method. Fixed R:R exits first. Structural exits at the key level. Trailing rides the full trend.
02 — R:R Changes Everything
The Maths of Winning
Three traders: same number of trades, same risk. Different R:R. Watch how the equity curves diverge.
03 — Method Profiles
Each Method in Detail
04 — The R:R Table
Expected Profit per 100 Trades (£100 risk)
| R:R | 40% WR | 45% WR | 50% WR | 55% WR | Verdict |
|---|---|---|---|---|---|
| 1:1 | £-20 | £-10 | £+0 | £+10 | Barely breakeven at 50% WR |
| 1:1.5 | £-20 | £+2.5 | £+25 | £+47.5 | Profitable at 45%+ WR |
| 1:2 | £+20 | £+35 | £+50 | £+65 | Profitable even at 40% WR |
| 1:3 | £+20 | £+85 | £+100 | £+115 | Strongly profitable at 38%+ WR |
| 1:5 | £+140 | £+170 | £+200 | £+230 | Extremely profitable — reversal territory |
💡 Key insight: At 1:2 R:R, even a 40% win rate is profitable (+£20 per 100 trades). At 1:1, you need 50%+ just to break even. The higher your R:R, the less your win rate matters. This is why target selection is at least as important as entry selection.
05 — Expectancy Calculator
Test Any Combination
Enter your win rate, R:R, risk per trade, and number of trades to see your expected outcome.
Win Rate (%)
R:R (e.g. 2 = 1:2)
Risk per Trade (£)
Number of Trades
EV / Trade
+£50
Total (100 trades)
+£5000
Breakeven WR
33%
Your strategy is profitable. Each trade earns £50 on average.
06 — The Partials Strategy
ATLAS Recommended Exit Plan
The ATLAS standard for most trades combines the safety of fixed targets with the upside of trailing:
Step 1 — TP1 at 1:1 R:R (close 50%)
Secures base profit. Covers the risk of the remaining portion. Psychological relief — you CANNOT lose money on this trade now.
Step 2 — Move stop to breakeven
The remaining 50% is now a FREE trade. Zero risk. Any additional profit is bonus money. This is where patience gets rewarded.
Step 3 — TP2 at structure or trail
Target the next structural level (supply OB, liquidity pool). OR trail behind Higher Lows. If the trend is strong, trailing captures 1:3, 1:5, or more.
💡 Why this works psychologically: TP1 at 1:1 gives you a “win” quickly. This satisfies the need for certainty. The runner at breakeven satisfies the need for possibility. You never feel like you left too much on the table OR took too little.
07 — When R:R Lies
Targets Must Be Realistic
A 1:5 R:R looks amazing on paper, but if your target sits beyond a major resistance level, the market may never reach it. R:R only works if the target is achievable.
Fake R:R: 5-pip stop, 50-pip target (1:10!) but price must pass through 3 supply OBs, a daily resistance, and a round number. The target is fantasy.
Real R:R: 10-pip stop, 20-pip target (1:2) with clear space to the next supply OB. No obstacles between entry and target. The target is realistic.
💡 The Motorway Analogy: A 1:5 R:R with 3 obstacles is like saying you can drive 500 miles in 5 hours — but there are 3 roadblocks on the route. The distance is real, but the obstacles mean you will never get there in time. Target the next clear stretch, not the horizon.
08 — Common Mistakes
4 Target Killers
09 — Cheat Sheet
Target Quick Reference
MINIMUM R:R = 1:1.5. Below this, the maths works against you.
PARTIALS = TP1 at 1:1 (50%) → BE → TP2 at structure or trail (50%). The ATLAS standard.
STRUCTURAL = Target just below the next supply OB, liquidity pool, or swing high. Respect where price reacts.
TRAILING = For runners after TP1. Trail behind HLs (longs) or LHs (shorts). Let the market decide the exit.
SKIP = If the next structure only gives 1:0.8 R:R, skip. Beautiful setup + bad R:R = bad trade.
10 — Test Your Understanding
Target Selection Game
5 scenarios. Choose the right exit strategy.
You enter a Model 1 long on Gold at 2,340. Stop at 2,330 (10-pip risk). The next supply OB is at 2,358. The next liquidity pool (equal highs) is at 2,365. What target approach makes the most sense?
11 — Knowledge Check
Final Quiz — 8 Questions
Question 1 of 8
What is the main advantage of structural targets over fixed R:R targets?
Question 2 of 8
A trade has a 10-pip stop. The next structural target is 8 pips away (R:R = 1:0.8). What should you do?
Question 3 of 8
What is the recommended partial exit strategy for most ATLAS trades?
Question 4 of 8
A trader with 1:3 targets has a 32% win rate. What is his EV per £100 risked?
Question 5 of 8
When is trailing WITHOUT partials appropriate?
Question 6 of 8
Your Gold trade hits 1:1 (+10 pips). The trend looks strong. What is the correct management?
Question 7 of 8
Why does increasing R:R from 1:1 to 1:2 allow a LOWER win rate to remain profitable?
Question 8 of 8
What is the minimum R:R you should accept for a trade?