Free tool · Trading & Investing Education
Risk/reward calculator
Shows how much you stand to gain for each unit you risk, and the share of trades you would need to win just to break even at that ratio.
Education only, not investment advice. Trading carries a real risk of loss. Disclaimer.
Everything is calculated in your browser. Nothing you type is sent to us or anyone else, and nothing is stored.
How it works
Risk is the distance from entry to stop; reward is the distance from entry to target. The ratio is reward ÷ risk.
At a ratio of 1:R, winning trades pay R and losing trades cost 1, so you break even when you win 1 ÷ (1 + R) of trades, before costs.
R = |target − entry| ÷ |entry − stop| · Break-even win rate = 1 ÷ (1 + R)
Worked example
Entry 1.0850, stop 1.0825 and target 1.0925 is a 1:3 trade. You would need to win 25% of such trades to break even, before spreads and fees.
Limits
- A high ratio is not better on its own: distant targets are hit less often.
- Spreads, commissions and slippage raise the real break-even rate. Educational tool only.
Questions
Is 1:2 a good risk/reward?
It depends on how often the setup actually wins. A 1:2 trade breaks even at about 33% wins; your own journal is the only reliable way to know your win rate.