Risk-to-reward calculator
Risk-to-reward calculator
Enter your entry, stop loss and take profit. See what a win pays compared with what a loss costs, and the win rate that breaks even.
Break-even win rate by ratio
How often trades like this need to reach their target just to break even, before spreads and costs. The further the target, the fewer wins you need.
| Risk to reward | Target | Break-even win rate |
|---|---|---|
| 1 : 0.5 | +0.5R | 67% |
| 1 : 1 | +1R | 50% |
| 1 : 1.5 | +1.5R | 40% |
| 1 : 2 | +2R | 33% |
| 1 : 3 | +3R | 25% |
| 1 : 4 | +4R | 20% |
How the numbers are worked out
- Risk = distance from entry to stop. Gold buy at 4032, stop at 4024: $8.00, which is 80 pips.
- Reward = distance from entry to take profit. Target at 4056: $24.00, which is 240 pips.
- Ratio = reward ÷ risk = 240 ÷ 80 = 3. Risk-to-reward 1 : 3, or a +3R target.
- Break-even win rate = 1 ÷ (1 + ratio) = 1 ÷ 4 = 25%.
Add a lot size and you get the same in dollars. At 0.03 lots, a gold pip is worth $0.30, so the trade above risks $24 to make $72.
What the ratio tells you, and what it doesn't
The ratio tells you what a win pays compared with what a loss costs. It doesn't tell you how likely the target is. A target three times as far as the stop is reached less often than one the same distance away, so a bigger ratio isn't automatically a better trade. The two numbers work together: ratio and win rate. That's why judging a signal group by its win rate alone says so little, as the gold signals lesson shows.
Your entry matters too. Enter late and the stop is further away while the target is closer, so the same trade idea gives you a worse ratio. How to read a gold trade idea walks through exactly that. Once you know your stop, the lot size calculator tells you how big the trade should be.
Questions about risk to reward
How do I calculate the risk-to-reward ratio?
Divide the distance to your take profit by the distance to your stop loss. A gold buy at 4032 with a stop at 4024 risks 80 pips. A target at 4056 is 240 pips away. 240 ÷ 80 = 3, so the risk-to-reward is 1 : 3, also called a +3R target.
Is it written 1 : 3 or 3 : 1?
Both, depending on the order. Risk-to-reward puts the risk first (1 : 3). Reward-to-risk puts the reward first (3 : 1). They describe the same trade: a win pays three times what a loss costs. When in doubt, say "+3R".
What is a good risk-to-reward ratio?
There is no single right number, because it only means something together with how often trades reach their target. A 1 : 3 trade needs to work about one time in four to break even; a 1 : 1 trade needs to work half the time. Many traders like their targets to be at least as far away as their stop.
What win rate do I need with a 1 : 2 ratio?
About 33%. With wins of 2R and losses of 1R, one win covers two losses, so one win in every three trades breaks even. The calculator shows this for any ratio, before spreads and costs.
Does the ratio include the spread?
No. The calculator uses the prices you enter. In practice the spread and any slippage make the risk a little bigger and the reward a little smaller, so the real ratio is slightly worse than on paper.
For education only. Values are for a USD account and ignore spreads, swaps and slippage. Leveraged trading is high risk.