Free tool
Risk-reward calculator
Free risk-reward calculator: enter your entry, stop and target to see the ratio, the win rate you need to break even and the money at risk and at target.
Quick answer: risk-reward = distance to your target ÷ distance to your stop. Buying EUR/USD at 1.0850 with a stop at 1.0820 (30 pips) and a target at 1.0910 (60 pips) gives 1:2. The break-even win rate is 1 ÷ (1 + 2) = 33.3%, before costs.
Risk-reward
- Break-even win rate
- Risk
- Reward
- Money at risk
- Money at target
Illustrative prices. Type your platform's live price. Money amounts are converted at the entry price and leave out spread and commission.
How it's calculated
The risk-reward ratio compares what you stand to lose at your stop loss with what you aim to make at your take profit. The break-even win rate is how often trades like this must win for the wins to pay for the losses.
R = reward in pips ÷ risk in pips; break-even win rate = 1 ÷ (1 + R)
Worked example
You buy EUR/USD at 1.0850 with a stop at 1.0820 and a target at 1.0910. The risk is 30 pips and the reward is 60 pips, so R = 60 ÷ 30 = 2, written 1:2. The break-even win rate is 1 ÷ (1 + 2) = 33.3%. With 0.5 lots ($5 a pip) you risk $150 to aim for $300.
Now you sell GBP/USD at 1.2700 with a stop at 1.2740 (40 pips) and a target at 1.2640 (60 pips). R = 60 ÷ 40 = 1.5, so you need to win more than 1 ÷ 2.5 = 40% of trades like this. With 0.25 lots ($2.50 a pip) you risk $100 to aim for $150.
Common mistakes
- Chasing a big ratio with an unrealistic target. A 1:5 trade looks great on paper, but if the target is rarely reached, the win rate falls and the edge can disappear.
- Judging the ratio without the win rate. Neither number alone tells you if a strategy works. Together they give its expectancy.
- Moving the stop further away during the trade. That raises the risk and quietly lowers the ratio you planned.
Once the levels are set, size the trade with the position size calculator so the money at risk matches your plan.
Frequently asked questions
What is a good risk-reward ratio?
There is no single good number. A ratio only means something next to your win rate. A strategy that wins 60% of the time can break even at 1:0.67, while one that wins 30% of the time needs better than 1:2.33. Look at both numbers together, from your own tested results.
How do I work out the break-even win rate?
Divide 1 by 1 plus the reward multiple. At 1:2, that is 1 ÷ 3 = 33.3%. At 1:1 it is 50%, and at 1:3 it is 25%. Win more often than that, on average, and the trades make money before costs; win less often and they lose.
Is it written 1:2 or 2:1?
Both appear. Risk-to-reward is usually written 1:2, meaning you risk 1 to aim for 2. Some people write reward-to-risk as 2:1 or simply 2R. They describe the same trade, so check which way round a source means it.
Does the ratio include the spread?
Not unless your prices do. On a buy you enter at the ask and exit at the bid, so the spread makes the real risk slightly bigger and the real reward slightly smaller. On short-term trades with tight stops that can change the ratio noticeably.