Risk / reward calculator
Enter entry, stop, and target. It gives you the ratio, the R-multiple, and — the part most calculators skip — the win rate that ratio requires before you make a cent.
Ratio alone tells you nothing
Traders quote risk-reward like it is a grade. "I only take 1:3 setups." But a ratio is one half of a pair, and the other half is how often you are right. Chasing high ratios usually means taking distant targets that rarely fill, and a 1:5 setup that hits 12% of the time is a losing strategy.
That is why this calculator shows the break-even win rate next to the ratio. It converts the ratio into the only question that matters: how often do I need to be right for this to work?
The break-even table
- 1 : 1 → you need to win more than 50%
- 1 : 1.5 → more than 40%
- 1 : 2 → more than 33.3%
- 1 : 3 → more than 25%
- 1 : 5 → more than 16.7%
Those are break-even numbers, before commissions, spread, and slippage. Add a few points to each in real trading.
Use your real win rate, not your hoped-for one
The last field is the honest one. Most traders overestimate their win rate by ten points or more, because losses blur together and wins are memorable. The only reliable source is a journal with every trade in it — including the ones you would rather forget.
Where the ratio quietly lies
A ratio measured at entry assumes you hold to target or stop. In practice people take partial profits early and let losers run to the full stop, which turns a planned 1:3 into a realised 1:1.2. The planned ratio was never wrong; the execution changed it. Logging both the planned and the realised R for each trade is the fastest way to spot that pattern in yourself.
Questions
What is a good risk reward ratio?
There is no single good ratio - it only means something next to your win rate. A 1:1 ratio needs better than 50% wins. A 1:3 ratio needs only 25%. A trader winning 60% of the time with 1:1 makes more money than a trader winning 20% of the time with 1:3.
What does R-multiple mean?
R is the amount you planned to risk. A trade that makes three times your planned risk is +3R; a full stop-out is -1R. It lets you compare a forex trade with an options trade, because both are measured against your own plan rather than in dollars.
How do I work out my break-even win rate?
Divide 100 by (1 + your reward-to-risk ratio). At 1:2 that is 100 ÷ 3 = 33.3%, so you need to win more than a third of the time before the strategy makes money.