The risk/reward calculator (R:R) shows the ratio of your take profit to your stop loss and whether the strategy is profitable at your win rate. Enter the stop and target in pips or prices, the share of winning trades and the risk per trade — the calculator returns the break-even win rate, expectancy and the result over 100 trades.
How to use the calculator
- Mode — in pips (stop 20, target 50) or by price (entry, stop, target).
- Win rate — from your trading history or strategy tester. If unsure, start with 40%.
- Risk per trade, % — the share of the balance lost at the stop. Used for account growth.
Formulas
R:R = Target ÷ Stop. 1R is the amount risked on one trade.
Break-even win rate = 1 ÷ (1 + R:R) — at this win rate the strategy makes zero.
Expectancy = Win rate × R:R − (1 − Win rate) — the average result per trade in R.
Example
Stop 20 pips, target 50: R:R = 1 : 2.5. Break-even win rate = 1 ÷ 3.5 = 28.6%. With 40% winners, expectancy = 0.4 × 2.5 − 0.6 = +0.4R per trade, or +40R per 100 trades. At 1% risk per trade the account grows about 47% (compounded).
Break-even table
| R:R | Break-even win rate | Expectancy at 40% wins |
|---|---|---|
| 1 : 0.5 | 66.7% | −0.40R |
| 1 : 1 | 50% | −0.20R |
| 1 : 1.5 | 40% | 0 |
| 1 : 2 | 33.3% | +0.20R |
| 1 : 3 | 25% | +0.60R |
| 1 : 4 | 20% | +1.00R |
The key rule: the further the target relative to the stop, the less often you need to be right. At 1:3 a strategy is profitable even if 70% of trades hit the stop.
Why a high R:R isn’t a guarantee
The further the target, the less often price reaches it — the win rate drops. Compare the pair “R:R + win rate” on real trade history, not the ratio alone. Useful techniques are partial close at 1R with a stop moved to break-even, and placing levels by chart structure.
Once the ratio is set, the lot size calculator sizes the trade for your risk.
FAQ
What is a good risk/reward ratio?
Most traders aim for 1:2 or better: the strategy is then profitable at a 34% win rate. Real profitability depends on the pair “R:R + win rate”.
What does R mean in trading?
R is the amount risked on one trade (the loss at the stop). A +2R profit means you made twice what you risked.
How do I calculate the break-even win rate?
1 ÷ (1 + R:R). For 1:2 it’s 33.3%, for 1:3 — 25%.
Does it include spread and commission?
No. With tight stops the spread noticeably worsens the ratio — add it to the stop and subtract it from the target.
