Tool
Risk reward calculator
Risk-to-reward (R:R) compares what a trade can lose, from the entry to the stop loss, with what it aims to make, from the entry to the take profit. A buy at 1.1000 with a stop at 1.0970 and a target at 1.1060 risks 30 pips to make 60, which is 1:2. At 1:2 you break even by winning one trade in three.
Risk to reward
1 : 2.00
Each unit risked aims to make 2.00.
- Risk
- 30 pips
- Reward
- 60 pips
- Break-even win rate
- 33.3%
You need to win more than 33.3% of trades like this one to come out ahead.
Average result per trade
- 30% wins
- −0.10R
- 40% wins
- +0.20R
- 50% wins
- +0.50R
- 60% wins
- +0.80R
The prices are examples until you type your own; no live prices are fetched. Your inputs stay in your browser.
The formulas
R:R = (Take profit − Entry) ÷ (Entry − Stop loss)
Break-even win rate = Risk ÷ (Risk + Reward) = 1 ÷ (1 + R)
Measure both distances from the entry and ignore the sign, so the same formulas work for a sell, where the stop sits above the entry and the target below it. The calculator shows the distances in pips: 0.0001 on most forex pairs, 0.01 on yen pairs and $0.01 on gold.
With costs, add the spread and commission to the risk and take them off the reward before dividing:
R:R after costs = (Reward − Costs) ÷ (Risk + Costs)
The calculator also shows the average result per trade in R, the amount you risk on one trade, at a few win rates:
Average result = Win rate × R − (1 − Win rate)
Worked examples
EUR/USD buy, no costs
Entry 1.1000, stop 1.0970, target 1.1060. Risk 30 pips, reward 60 pips: 60 ÷ 30 = 1:2. Break-even win rate: 30 ÷ 90 = 33.3%.
The same trade with 1.5 pips of costs
Risk becomes 31.5 pips and reward 58.5 pips: 58.5 ÷ 31.5 = 1:1.86. Break-even: 31.5 ÷ 90 = 35%. The tighter the stop, the more the spread matters: on a 10-pip stop and a 20-pip target, the same 1.5 pips push the break-even from 33.3% to 38.3%.
Gold (XAU/USD) sell
Entry 4,000.00, stop 4,010.00, target 3,970.00. Risk $10.00 (1,000 pips of $0.01), reward $30.00 (3,000 pips): 1:3. Break-even: 1 ÷ (1 + 3) = 25%.
Why the win rate matters as much as the ratio
Winning 40% of 1:2 trades averages 0.4 × 2 − 0.6 = +0.2R per trade. Winning 40% of 1:1 trades averages 0.4 × 1 − 0.6 = −0.2R. Same hit rate, opposite result. These are arithmetic, not forecasts: your real win rate only comes from your own record.
Why R:R matters
R:R sets the bar a setup has to clear. Before you place a trade, the break-even win rate tells you how often it must work for the plan to pay over many trades. If you know from your journal that a pattern reaches its target about a third of the time, a 1:1 plan on it is a slow loss, while a 1:2.5 plan has room for error.
It also keeps targets honest. Stretching the target to show a better ratio doesn't help if price rarely gets there. Put the stop where the trade idea is wrong and the target where the next real level sits, then read the ratio. If it's poor, the better choice is often to skip the trade.
R:R is a ratio, not an amount. To turn the stop into money, size the position with the lot size calculator, and check what each pip is worth with the pip calculator.
Common mistakes
- Moving the target further away just to make the ratio look better. The ratio rises, but the chance of reaching it falls.
- Ignoring costs on short trades. A 1.5-pip spread is small on a 60-pip stop and large on a 10-pip one.
- Widening the stop after entry. The trade you planned was 1:2; the one you now hold may be 1:1.
- Judging a strategy by R:R alone. A high ratio with a low win rate and a low ratio with a high win rate can both lose money.
- Mixing up 1:2 and 2:1 when comparing tools or courses. Check which number is the risk.
R:R in StraviFX
When StraviFX plans a trade, its execution ladder lists the entry, stop loss and two targets (TP1 and TP2), each with the distance in pips and the reward-to-risk, then sizes the position from your equity and risk percentage. The journal follows every setup to its target or stop, so your own win rate builds up over time. See what the app does or learn the basics of trading first.
FAQ
What is a good risk-to-reward ratio?
There is no single good number, because R:R trades off against how often you win. At 1:2 you need to win more than a third of your trades; at 1:1, more than half. A distant target improves the ratio but is reached less often, so judge R:R together with how often setups like yours actually hit their target.
How do I calculate the break-even win rate?
Divide the risk by the risk plus the reward. A trade risking 30 pips to make 60 breaks even at 30 ÷ 90 = 33.3%. The same thing written with the ratio is 1 ÷ (1 + R), so 1:3 breaks even at 25%.
Is 1:2 the same as 2:1?
They usually describe the same trade written in a different order. This page puts the risk first, so 1:2 means risking 1 to make 2. Some platforms and books put the reward first and write 2:1. Check which number belongs to the stop before you compare setups.
Do spreads and commissions change my R:R?
Yes. You pay the spread and commission whether the trade wins or loses, so they make the loss a little bigger and the win a little smaller. On a 30-pip stop and a 60-pip target, 1.5 pips of costs turn 1:2 into about 1:1.86 and lift the break-even win rate from 33.3% to 35%.
Does R:R tell me how much money I'll lose?
No. R:R is a ratio of distances, so it's the same on 0.01 lots and on 1 lot. The money comes from your position size: the stop in pips times the pip value times your lots. Use the lot size calculator to set that from the percentage of your account you're willing to lose.
Get StraviFX
Point your camera at any chart and StraviFX reads the structure, plans the entry, stop and targets, and sizes your risk. Free to download on Android, with optional subscriptions.
