Free tool

Risk to reward calculator

The ratio your entry, stop and target imply, and the win rate you would need for that ratio to break even. The second number is the one that settles arguments.

Instrument

Levels

USD · optional
Risk : Reward
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Enter an entry, stop and target.
How it works

What the risk and reward calculator does

R = (target - entry) / (entry - stop)breakeven win rate = 1 / (1 + R)

Both distances are measured from the entry, so the ratio holds whatever the instrument and whatever the size. Only the direction of the stop and target changes between a long and a short.

Example

A worked example

  1. 01Long from 1.0850, stop at 1.0800, target at 1.0980.
  2. 02Risking 0.0050 to make 0.0130.
  3. 030.0130 / 0.0050 = 2.6R.
  4. 041 / (1 + 2.6) = 27.8%, the win rate that setup needs to break even.
Questions

Worth knowing

Is a higher ratio always better?
No, and this is the trap. A 5R target has a lower breakeven win rate on paper and is also further away, so it is hit less often. The ratio is only worth having if your actual win rate clears the number below it.
What is an R multiple?
Your risk expressed as one unit. If you risk $200 and make $600, that is 3R whatever the account size, which is what makes trades comparable across accounts and instruments.
Does the breakeven win rate include costs?
No. It is the pure price arithmetic. Spread and commission push the real figure a little higher, so treat the number here as the floor rather than the target.
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