The risk:reward (R:R) ratio looks at the relationship between the size of your winning trades and the size of your losing trades. It is calculated as:
Avg Winning P&L / Avg Losing P&L
Convention calls this metric risk:reward although it is always calculated as reward:risk.
For example, if your winning trades average $150 and your losing trades average $50, then your R:R ratio will be 3:1.
A trading strategy will break even if the win rate is 50% and the R:R ratio is 1:1. If the win rate is higher, then the R:R can be lower and vice versa.
The “Risk Reward over time” chart shows how your R:R ratio changed over time, as well as how successful you have been at reaching your target R:R.
The “Average P&L Per Trade by winners and losers” chart splits out the average winning P&Lfrom the average losing P&L.
Use this chart if there is large variations in your Risk Reward over time chart, to understand if it is caused by a period of extra small/large winning trades,or extra large/small losing trades.This will help you to identify more clearly areas of strength or weakness.