Risk / reward calculator
A trade with a poor risk-to-reward ratio needs a very high win rate just to break even. Enter your entry, stop and target to get the ratio and the minimum win rate that makes it profitable.
Results
- Risk : reward
- 1 : 2
- Break-even win rate
- 33.3%
These tools are for education only. Check your broker's contract specifications — pip sizes, lot sizes and margin rules vary.
What is the risk-reward ratio?
The risk-reward ratio compares how much you stand to lose if your stop loss is hit with how much you stand to gain if your take profit is reached. A trade that risks 50 pips to make 100 pips has a ratio of 1:2 — for every unit of risk there are two units of potential reward. It is written as R:R or simply as a multiple of R.
Its real power appears when paired with the win rate. A 1:2 trade only needs to win 34% of the time to break even; a 2:1 trade (risking two to make one) needs 67%. Traders who track both numbers know whether a strategy has a positive expectancy, rather than judging it by the last few results.
How to use the risk reward calculator
Enter your entry price
The price at which you plan to open, or the price you were filled at.
Enter the stop-loss price
Place it where your trade idea is proven wrong — beyond a swing high or low, a level, or an ATR multiple — not at a round number of pips.
Enter the take-profit price
Use the next realistic level the market is likely to reach, not the most optimistic one.
Read the ratio and break-even win rate
The ratio shows reward per unit of risk; the break-even rate is the minimum share of winners that makes the setup profitable before costs.
Risk reward formula
Risk = |Entry − Stop loss|
Reward = |Take profit − Entry|
Ratio (R) = Reward ÷ Risk
Break-even win rate = 1 ÷ (1 + R)Example: buy EURUSD at 1.1000 with a stop at 1.0950 and a target at 1.1100. Risk = 50 pips, reward = 100 pips, ratio = 2.0 (1:2). Break-even win rate = 1 ÷ (1 + 2) = 33.3%. If you win 45% of such trades, the expectancy per trade is 0.45 × 2R − 0.55 × 1R = +0.35R.
Risk reward tips
- Set the stop loss and target from the chart before you calculate; then decide whether the resulting ratio is worth taking. Never move the stop to improve the number.
- A high ratio is not automatically better — a 1:5 target that is rarely reached loses to a 1:1.5 target that hits 60% of the time. Track your real win rate.
- Add the spread and commission to the risk side. On a 10-pip scalp a 1.5-pip spread turns 1:2 into roughly 1:1.7.
- Combine this tool with the position size calculator: the ratio tells you if the setup is good, the lot size keeps the R fixed in money.
Risk reward FAQ
What is a good risk-reward ratio in forex?
Most guides suggest at least 1:1.5 to 1:2 for swing and day trades, which lets you stay profitable with a win rate around 40–50%. Scalpers often accept 1:1 with a higher win rate. What matters is the combination of ratio and win rate, not the ratio alone.
How do I calculate the risk-reward ratio?
Divide the distance from entry to take profit by the distance from entry to stop loss. A 30-pip stop and a 90-pip target give 90 ÷ 30 = 3, written as 1:3.
What win rate do I need for a 1:1 ratio?
More than 50% before costs, because half your trades must win just to break even. Once the spread and commission are included, a 1:1 strategy typically needs about 53–55% winners.
What is break-even win rate?
The percentage of winning trades at which total profit equals total loss. It is 1 ÷ (1 + R): 50% for 1:1, 33% for 1:2, 25% for 1:3. Any win rate above it is profitable before costs.
Is 1:3 risk reward realistic?
Yes, on trend-following and breakout strategies where winners run, but the win rate is usually 30–40%. Expect long losing streaks and size positions so they are survivable.
Should I close a trade early if the ratio gets worse?
If the reason for the trade is gone, yes. Otherwise, changing the plan mid-trade is what turns a positive-expectancy strategy into a negative one. Decide the rules for partial exits in advance and stick to them.