Risk Reward Ratio Calculator
Compare the distance to your stop against the distance to your target, and find the win rate that ratio requires to break even.
Last reviewed
·Free · No sign-up · Runs in your browser
A risk to reward ratio on its own says nothing about whether a strategy makes money. A three-to-one ratio with a twenty percent win rate loses; a one-to-one ratio with a sixty percent win rate wins. The ratio and the win rate only mean something together.
This calculator reports the ratio and then the number that matters: the win rate required to break even at that ratio. Enter your actual win rate and it produces the expectancy, which is the only figure that determines whether the strategy is profitable over time.
Result
Risk to reward ratio
2:1
- Break-even win rate
- 33.33%
- Assessment
- Positive at the win rate entered
- Risk
- $600
- Reward
- $1,200
- Risk per unit
- 2.4
- Reward per unit
- 4.8
- Expectancy per trade
- $210
- Expectancy per 100 trades
- $21,000
This tool is for informational and educational purposes only. It is not financial or investment advice, and past performance does not guarantee future results.
At a 2:1 ratio you need to win more than 33.33% of trades just to break even before costs.
The expectancy figure assumes every win reaches the target and every loss stops exactly at the stop. Real fills, slippage and partial exits change it.
How to use the risk reward ratio calculator
- Enter the entry, stop and target prices.
- Enter the position size to see the risk and reward in currency.
- Read the break-even win rate the ratio requires.
- Enter your real win rate to get the expectancy per trade.
What people use this for
- Screening a setup before taking it.
- Finding the win rate a strategy needs at its typical ratio.
- Comparing two setups with different stop and target distances.
- Understanding why a high win rate strategy can still lose money.
Worked examples
Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.
A two-to-one setup
Entry $42.50, stop $40.10, target $47.30, 250 units, 45% win rate.
- Risk to reward ratio
- 2:1
- Break-even win rate
- 33.33%
- Expectancy per trade
- $210
A tight target that needs a high win rate
Entry $42.50, stop $40.10, target $43.70.
- Risk to reward ratio
- 0.5:1
- Break-even win rate
- 66.67%
- Assessment
- Negative at the win rate entered
The break-even win rate is the real output
Every ratio implies a win rate below which the strategy loses. One-to-one needs more than fifty percent. Two-to-one needs more than thirty-three. Three-to-one needs more than twenty-five.
Comparing that requirement against your actual measured win rate is the whole exercise. A ratio that sounds attractive but requires a win rate you have never achieved is not attractive.
Targets have to be reachable
It is trivial to improve a ratio on paper by moving the target further away. The ratio improves and the probability of reaching it falls, usually by more.
A ratio is only meaningful if the target is somewhere price plausibly goes. Setting one at a level that is never reached produces excellent ratios and no profits.
Costs are not in the ratio
Commission and spread reduce every winner and enlarge every loser, which raises the break-even win rate above what the ratio alone suggests. On strategies with small targets the effect is substantial.
The fee impact calculator quantifies that drag. Any ratio close to break-even should be checked against it before being relied on.
Methodology and assumptions
What this calculator does, and what it deliberately does not do.
- Results are arithmetic on the numbers you enter. Nothing here predicts prices or connects to an exchange, broker or market data feed.
- Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.
This tool is for informational and educational purposes only and does not constitute financial or investment advice. Past performance does not guarantee future results.
Nothing on this website is a recommendation to buy, sell or hold any security, currency, derivative or digital asset. No price is predicted and no return is promised or implied.
Trading and investing carry the risk of substantial loss, including the loss of your entire capital. Leveraged products can produce losses that exceed your deposit. Tax treatment depends on your jurisdiction and your circumstances.
Frequently asked questions
What ratio should I aim for?
There is no correct answer, and it depends entirely on your win rate. High win rate strategies work at low ratios; low win rate strategies need high ones. Match the two rather than chasing a number.
Is a three-to-one ratio always better?
No. A wider target is harder to reach, so the win rate usually falls with it. The two move together and only the combination matters.
Why is my expectancy negative with a good ratio?
Because the win rate is below what the ratio requires. The break-even figure shows exactly where that line sits.
Should I include fees?
The ratio here is calculated from prices alone. Fees raise the break-even win rate, so treat the figure as slightly optimistic.
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