Risk/reward ratio calculator
Choose the direction of the trade and enter the entry, stop (SL) and target (TP) prices. The calculator shows the risk/reward ratio, how many R you make if the target is hit, and what share of your trades must win to avoid losing money at that ratio.
Direction
For pips; on stocks and crypto the price difference is shown.
Example values; enter your own prices.
Risk/reward ratio
1:2.5
+2.5R at target · −1R at stop
- Risk (entry → stop)
- 30 pips
- Reward (entry → target)
- 75 pips
- Win rate to break even
- 28.6%
At this ratio, if more than 28.6% of your trades reach the target you come out ahead over time. Spread and commission not included.
For education only; your broker's contract size, lot step and pip definition may differ. Not investment advice.
How is the risk/reward ratio calculated?
Risk is the distance from entry to stop; reward is the distance from entry to target. Ratio = reward ÷ risk. On a buy the stop is below the entry and the target above; on a sell it's the other way round.
Example: buy EUR/USD at 1.0850, stop 1.0820, target 1.0925. Risk is 30 pips, reward 75 pips; the ratio is 75 ÷ 30 = 2.5, or 1:2.5. Hit the target and you make 2.5 times what you risked: +2.5R.
Maths done, now read the chart
This chart shows a wide range with price in the middle. Before deciding, measure where your stop and target would land if you entered, and how many R that trade would be worth.
Your turn: read the chart and make your call.
No sign-up needed. Take a guess; when the chart opens, you'll see why.
Break-even win rate
The ratio alone isn't enough; it means something together with how often you are right. Win rate needed to break even = 1 ÷ (1 + ratio). At 1:1 that is 50 percent, at 1:2 33.3 percent, at 1:2.5 28.6 percent, at 1:3 25 percent.
Expectancy comes from the two together: win rate × ratio − (1 − win rate). With a 40 percent win rate and a 1:2 ratio you make +0.2R per trade on average; with the same win rate at 1:1 you lose 0.2R per trade. Spread and commission are not included; in practice the win rate you need is a little higher.
A higher ratio isn't always better
You can make every trade 1:5 by moving the target further away, but the chance of price getting there falls. You don't pick the ratio, the chart gives it to you: the stop goes beyond the point where the structure breaks, the target in front of the next clear level. If there isn't room for more than 1:1.5 between the two levels, sometimes the right move is to skip the trade.
Squeezing the stop to make the ratio look good is the most common mistake. Pull a 30-pip structural stop in to 10 pips and the ratio triples, but now an ordinary wick takes you out. The ratio improves on paper; the win rate drops in reality.
Frequently asked questions
What is a good risk/reward ratio?
There's no single right ratio; it has to be judged with your win rate. Most traders aim for 1:2 or better, because at that ratio winning a third of your trades is enough to break even. But the ratio must come from the structure on the chart: writing 1:3 when the target sits beyond the next level just lowers the win rate.
What do TP and SL mean?
SL (stop loss) is the order that cuts the loss when a trade goes against you; TP (take profit) is the order that takes the profit when price reaches the target. The risk/reward ratio is the ratio of their distances from the entry.
What is R, and what does +2R mean?
R is the distance you risk on a trade: from entry to stop. +2R means you made twice what you risked; −1R means you were stopped out. Thinking in R lets you compare results regardless of lot size or market. Puzzle results on VerTrader are measured in R too.