Risk / Reward Calculator.
Trading is a probability game. Risk-to-reward decides whether your edge actually pays — even a 40%-win strategy is profitable at 1:2 R:R, and a 60%-win strategy still bleeds at 1:0.4. Enter your entry, stop, target and position size below and the calculator returns the ratio, the dollar risk and reward, and the win rate you'd need just to break even. Use it before every trade. If the R:R doesn't justify the win rate you can realistically deliver, skip the setup.
Inputs
The trade idea
Direction: Long
Pip size: 0.0001
Result
Trade quality
The maths behind expectancy
Two metrics matter: how often you win and how much you make when you do versus when you don't. R:R captures the second. Combined with win rate it gives expectancy — the average dollars per trade you can expect over a large sample.
Formulas
R:R = |Target − Entry| ÷ |Entry − Stop|
BreakevenWinRate = 1 ÷ (1 + R:R)
- 1:1 R:R needs more than 50% win rate to be profitable after costs.
- 1:2 R:R only needs ~33% — comfortable for trend-following setups.
- 1:3 R:R only needs ~25% — runner trades, breakout continuations.
- Always include spread and commission when planning — they shrink R:R on small stops.
Risk/reward questions
- What is a good risk-to-reward ratio?
- Most consistent traders aim for at least 1:2 — risking one unit to make two. At 1:2 you only need to win about 33% of trades to break even, which leaves a comfortable margin for a profitable edge.
- How do I calculate risk-to-reward ratio?
- Risk-to-reward = reward ÷ risk, where risk is the distance from entry to stop and reward is the distance from entry to target. If you risk 20 pips to make 60 pips, your R:R is 1:3.
- What win rate do I need to be profitable?
- The breakeven win rate is 1 ÷ (1 + R:R). A 1:1 trade needs more than 50% to profit after costs, 1:2 needs about 33%, and 1:3 needs about 25%. Any win rate above the breakeven gives a positive expectancy.
Good R:R lives at structural levels.
Trade where the stop is small and the target is meaningful. See the framework we use.