Free tool · trade planning

Risk Reward Ratio Calculator

The risk reward ratio compares what a trade can make with what it can lose: the distance from entry to target divided by the distance from entry to stop. At 1:2 a trade risks 1 to make 2, so it only needs to win more than a third of the time (33.3%) to break even before costs.

Enter your entry, stop and target to see the risk to reward ratio, the win rate you need to break even, and what the trade is worth per attempt at your win rate. Works for gold, forex, stocks and crypto.

Risk reward ratio

1 : 2.00

Risk (entry to stop): 6.00
Reward (entry to target): 12.00+2.00R if it hits
Win rate needed to break even: 33.3%before spread and commission
Expectancy at a 40% win rate: +0.20Raverage gain per trade, in units of risk

To turn the stop into a position size, use the gold lot size calculator.

Our gold setups come with stop, TP1 and TP2See today's reaction areas, each with an invalidation level and two targets, then check the ratio here.Today's gold analysis →

Risk reward ratio and break-even win rate

The win rate a strategy needs just to break even (1 ÷ (1 + ratio)), and the expectancy at a few win rates. Costs ignored.

Break-even win rate and expectancy by risk reward ratio
Ratio	Break-even win rate	At 30% wins	At 40% wins	At 50% wins	At 60% wins
1 : 0.5	66.7%	−0.55R	−0.40R	−0.25R	−0.10R
1 : 1	50.0%	−0.40R	−0.20R	+0.00R	+0.20R
1 : 1.5	40.0%	−0.25R	+0.00R	+0.25R	+0.50R
1 : 2	33.3%	−0.10R	+0.20R	+0.50R	+0.80R
1 : 3	25.0%	+0.20R	+0.60R	+1.00R	+1.40R
1 : 4	20.0%	+0.50R	+1.00R	+1.50R	+2.00R

How to use the risk reward ratio

The ratio on its own doesn't tell you whether a trade is good. It tells you how often the trade has to work. A 1:2 trade only needs to win a third of the time to break even, but if the setup behind it wins a quarter of the time, it still loses money. Pair the ratio with an honest win rate from your own record.

A long trade with entry 4,400, stop 4,394 and target 4,412: risk 6, reward 12, a 1:2 ratio with a 33.3% break-even win rate, worth +0.2R per trade at a 40% win rate — The calculator's default trade: 1:2 needs a 33.3% win rate to break even.

Our bots set two targets on every setup: TP1 at one times the risk and TP2 at two times the risk (gold on the Scalper and Basic Day uses fixed $10 and $20 moves instead). At those ratios the break-even win rates are 50% and 33.3%. The full rules are on the methodology page, and the win rate calculator shows what your own record adds up to.

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Risk reward calculator FAQ

How do you calculate the risk reward ratio?

Risk is the distance from entry to stop; reward is the distance from entry to target. The ratio is reward ÷ risk. Buying at 100 with a stop at 95 and a target at 110 risks 5 to make 10, a 1:2 risk reward ratio (2R).

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

33.3%, before costs. The break-even win rate is 1 ÷ (1 + ratio): 50% at 1:1, 40% at 1:1.5, 33.3% at 1:2 and 25% at 1:3. Spread, commission and slippage push the real number a little higher.

Is a higher risk reward ratio always better?

No. A far target is reached less often, so the win rate usually falls as the ratio rises. What matters is expectancy: win rate × average win − loss rate × average loss. A 1:1 strategy that wins 60% of the time beats a 1:3 strategy that wins 20%.

What is a good risk to reward ratio?

There is no single right number. Many traders look for at least 1:2, where the target is twice as far as the stop and the strategy needs to win more than 33.3% of the time to break even. A lower risk to reward ratio can still work if the setup wins often enough; the table on this page shows the trade-off.

What does R mean in trading?

R is the amount you risk on a trade. A trade that makes twice what it risked is +2R and a full stop-out is −1R. Measuring results in R lets you compare trades of different sizes and markets.

Educational, not financial advice. Trading involves risk of loss.