Risk / Reward Calculator
The ratio of what you risk to what you aim to make, and the win rate you need to break even at it. The single number that tells you if a trade is worth taking.
Your trade
Detected direction: Long
Risk / reward ratio
1 : 2.00
Solid: reward is at least twice the risk.
Risk (per unit)
0.005
Reward (per unit)
0.01
Break-even win rate
33.3%
At 1:2.00, you only need to win 33% of trades to break even.
Why risk/reward decides everything
Risk/reward and win rate together determine whether a strategy makes money. A high ratio lets you be wrong more often and still come out ahead, which is why professionals hunt for asymmetric trades.
break-even win rate = risk / (risk + reward)
At 1:1 you need to win more than half your trades. At 1:3 you only need about 25%. Pair this with the Stop Loss and Position Size tools to turn the ratio into a sized trade.
Disclaimer
Educational tool only, not investment advice. Trading carries risk of loss.
Common questions
- What is a good risk/reward ratio?
- Many traders look for at least 1:2, meaning the target is twice the stop distance. It lets you be profitable with a sub-50% win rate.
- What is break-even win rate?
- The percentage of trades you must win to break even at a given ratio. At 1:2 it is about 33%; at 1:3, about 25%.
- Is a higher ratio always better?
- Not necessarily. Very distant targets are hit less often. Balance the ratio against how realistic the target is.