Risk reward ratio calculator

Turn a planned entry, stop and target into a risk:reward ratio and the win rate that breaks even after costs.

Risk : reward → wins needed1 : 2 → 36.7%

1 : 2 Breaks even winning 33.3% of trades; with 0.1R of costs, 36.7%.

Reward : risk1 : 2

Costs in R: 0.1R is a 1-pip round trip on a 10-pip stop. Arithmetic on a plan, not a forecast of any win rate.

Read as text

Break-even win rate = 1 ÷ (1 + reward:risk): the share of trades you must win for the wins to pay for the losses.
1 : 1 needs 50.0%, 1 : 2 needs 33.3% and 1 : 3 needs 25.0%. A bigger target needs fewer wins, and each target sits further from the entry.
Costs come off every win and onto every loss: with 0.1R a trade, 1 : 2 needs (1 + 0.1) ÷ 3 = 36.7%.
Your plan, 1 : 2: 33.3% before costs, 36.7% with 0.1R of costs. Win more often than that, after costs and over many trades, or the plan loses money.

Entry price

Stop-loss price

Below the entry for a long trade, above it for a short.

Take-profit price

Round-trip costs (price units)

Spread + commission + expected slippage, as a price distance. 0 ignores them.

Risk : reward (long)

1 : 2.50

Risk 10, reward 25. After costs the payoff is 1 : 2.37, so this plan breaks even at a 29.7% win rate. Above it, the arithmetic is positive; it does not say how often the target is reached.

Target finder: ratio you want (1 : x)

Take profit at 2,020 for 1 : 2 from this entry and stop.

Risk : reward	Break-even win rate (no costs)
1 : 0.5	66.7%
1 : 1	50.0%
1 : 1.5	40.0%
1 : 2	33.3%
1 : 3	25.0%
1 : 4	20.0%

The math — break-even win rate = (risk + costs) ÷ (risk + reward)

Where the break-even win rate comes from

w = R ÷ (R + T): at 1:2 you need to win one trade in three, 33.3%.

The derivation, with costs

Call the stop distance R and the target distance T. Over many trades with win rate w, the average result is w × T − (1 − w) × R. Setting that to zero gives w = R ÷ (R + T). At 1:2, R = 1 and T = 2, so w = 1 ÷ 3 = 33.3%. Costs c come off every win and onto every loss: w = (R + c) ÷ (R + T).

Break-even win rate by risk:reward, before and after costs

Costs in R, as a share of the stop distance: 0.1R is a 1-pip round trip on a 10-pip stop.

Risk : reward	No costs	Costs 0.1R	Costs 0.2R
1 : 0.5	66.7%	73.3%	80.0%
1 : 1	50.0%	55.0%	60.0%
1 : 1.5	40.0%	44.0%	48.0%
1 : 2	33.3%	36.7%	40.0%
1 : 2.5	28.6%	31.4%	34.3%
1 : 3	25.0%	27.5%	30.0%
1 : 4	20.0%	22.0%	24.0%
1 : 5	16.7%	18.3%	20.0%

Expected result per trade by win rate and ratio

Win rate × ratio − loss rate, in R, before costs; a negative cell loses money however the trades are sized.

Win rate	1 : 0.5	1 : 1	1 : 1.5	1 : 2	1 : 3
30%	−0.55 R	−0.40 R	−0.25 R	−0.10 R	+0.20 R
40%	−0.40 R	−0.20 R	+0.00 R	+0.20 R	+0.60 R
50%	−0.25 R	0.00 R	+0.25 R	+0.50 R	+1.00 R
60%	−0.10 R	+0.20 R	+0.50 R	+0.80 R	+1.40 R
70%	+0.05 R	+0.40 R	+0.75 R	+1.10 R	+1.80 R

Why costs matter more on tight stops

A 1-pip cost lifts 1:2's break-even to 36.7% on a 10-pip stop, but only to 34.0% on a 50-pip stop.

The arithmetic

The same 1-pip cost is a bigger share of a small stop. At 1:2 with a 10-pip stop, it lifts the break-even win rate from 33.3% to (10 + 1) ÷ 30 = 36.7%. With a 50-pip stop and the same target ratio, it lifts it only to (50 + 1) ÷ 150 = 34.0%. Scalping plans with attractive ratios can still need a much higher hit rate once spread and commission are counted.

Risk:reward or reward:risk?

This page writes risk first: 1 : 2.5 means you risk 1 to make 2.5.

How platforms write it

Both orders are in use. This page writes risk first, so 1 : 2.5 means you risk 1 to make 2.5. Some platforms show the reward-to-risk ratio as a single number (2.5). Either way, check which distance is on top before comparing plans.

What the ratio does not tell you

Whether the rules win often enough at that ratio, after costs, over many trades.

Where to check that

A ratio describes one planned trade. Whether a set of rules is worth trading depends on the win rate those rules actually produce at that ratio, after costs, over a large sample. The expectancy calculator combines the two, and the risk of ruin calculator shows what the position size does to the chance of a deep drawdown.

Method and privacy

Method: Risk = |entry − stop| and reward = |target − entry|. Break-even win rate = (risk + costs) ÷ (risk + reward). Planned prices are assumed to fill exactly; slippage beyond the costs you enter is not modelled.

Calculations run entirely in your browser — nothing you type is uploaded. Copy and download actions save your calculation locally. The site may record coarse tool actions under its privacy policy, without inputs, results, file contents or filenames.

Common questions

How do you calculate the risk to reward ratio?

Divide the distance from entry to target by the distance from entry to stop. Entry 2,000, stop 1,990 and target 2,025 risk 10 to make 25: a 1:2.5 risk-to-reward ratio. Use the same price units for all three.

What win rate do I need for a 1:2 risk reward?

33.3% before costs: wins pay 2 units and losses cost 1, so one win in three breaks even. The general rule is 1 ÷ (1 + ratio). Costs raise it; this calculator adds them to every loss and removes them from every win.

Is a higher risk reward ratio always better?

No. A farther target pays more when it is hit but is usually hit less often. A ratio is only useful together with the win rate the same rules actually produce, and that needs a sizeable sample of trades.

Does risk reward include the spread?

Only if you include it. Enter your round-trip spread, commission and expected slippage as a price distance; the result shows the payoff and the break-even win rate after those costs.

Is 1:1 risk reward good?

It can be. At 1:1 a plan breaks even at a 50% win rate before costs, so it suits rules that win more often than they lose. Costs weigh more at 1:1: a cost of 0.1R lifts the break-even win rate to 55%.

How do I calculate risk reward for a short trade?

The same way, with the stop above the entry and the target below it. Entry 1.1000, stop 1.1050 and target 1.0900 risk 50 pips to make 100 pips: a 1:2 risk-to-reward ratio.

How do I set a take profit for a 1:2 risk reward?

Add twice the stop distance to the entry for a long trade, or subtract it for a short one. Entry 2,000 with a stop at 1,990 risks 10, so the 1:2 target is 2,020. The target finder in the calculator does this for any ratio.

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