Risk-to-Reward Ratio Calculator
Enter your entry, stop loss and target to see your risk-to-reward ratio — and how often you would need to win for the trade to pay.
Risk : Reward
Sets the unit distances are shown in: pips for forex, points for everything else.
Risk : reward
1 : 2
You are risking 1 for the possibility of making 2. At this ratio you would need to win more than 33.3% of your trades to break even, before costs.
How was this calculated?
- Risk = |Entry − Stop| = |1.1650 − 1.1600| = 0.005 (50 pips)
- Reward = |Target − Entry| = |1.1750 − 1.1650| = 0.01 (100 pips)
- Risk : reward = Reward ÷ Risk = 0.01 ÷ 0.005 = 2
- Break-even win rate = 1 ÷ (1 + 2) = 33.33%
What does this mean?
Risk-to-reward compares what you stand to lose with what you stand to make. Risking 50 pips to make 100 is a ratio of 1 : 2: for every 1 you risk, you aim to make 2.
It matters because it sets the win rate you need. The bigger your winners are compared with your losers, the less often you have to be right. That is why win rate on its own says very little about a strategy.
The formula
Risk = |Entry − Stop|
Reward = |Target − Entry|
Risk : reward = Reward ÷ Risk
Break-even win rate = 1 ÷ (1 + Risk : reward)
Worked example
Buy at 1.1650, stop at 1.1600, target at 1.1750. Risk = 50 pips and reward = 100 pips, so the ratio is 1 : 2. You would need to win more than one trade in three (33.3%) to break even before costs, and anything above that is profit.
Frequently asked questions
What is a good risk-to-reward ratio?
There is no single answer, because it works together with your win rate. Many traders look for at least 1 : 1.5 or 1 : 2 so that they can be wrong more often than they are right and still come out ahead. A higher ratio usually means a lower win rate.
How is risk-to-reward calculated for a short trade?
The same way, using absolute distances: risk is the distance from entry up to your stop, and reward is the distance from entry down to your target. The calculator detects the direction from where your stop and target sit.
Does risk-to-reward include the spread?
No. It uses the prices you enter. Spreads and commissions make your real risk slightly larger and your real reward slightly smaller, so leave a margin.
Learn more
This tool is for education and general information only and is not financial advice. Results are estimates that exclude spreads, commissions, swaps and slippage. Trading carries a risk of loss. Preferences you choose, such as your account currency, are remembered only in your own browser.