Risk / Reward Calculator
Every trade has two distances: how far price travels to your stop-loss, and how far it travels to your target. The ratio between them gives a planned reward-to-risk multiple. Enter your entry, stop-loss and take-profit prices to see the distances in pips and the before-cost break-even win rate under those fixed payoffs. Your realised hit rate, execution costs and achieved exits determine net results.
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Formula: reward-to-risk multiple = |Target − Entry| ÷ |Entry − Stop|; before-cost break-even win rate = 100 ÷ (1 + reward-to-risk multiple). At a realised 1:2 payoff the before-cost threshold is 33.33%. Planned targets do not establish the realised win rate or payoff. Include measured costs in the expectancy calculator.
How the risk/reward calculator works
Your risk is the price distance from entry to stop-loss; your reward is the distance from entry to take-profit. Dividing reward by risk gives the R:R ratio – a setup that risks 20 pips to make 50 pips is a 1:2.5 trade. The calculator converts both distances into pips using the pip size you select, then expresses the ratio in the familiar “1 : x” form.
The before-cost break-even win rate is 100 ÷ (1 + reward-to-risk multiple), provided wins and losses realise those payoffs. A higher planned target lowers this arithmetic threshold but can also lower the actual hit rate. Use measured outcomes and costs in the expectancy calculator to assess the net trade-off.
Worked example
Entry 1.10000, stop-loss 1.09800, take-profit 1.10500 on EUR/USD (pip size 0.0001). Risk = 20 pips, reward = 50 pips, so R:R = 1 : 2.5. Break-even win rate = 100 ÷ (1 + 2.5) = 28.6% – a 30% realised win rate would have positive gross expectancy under these fixed payoffs, but costs can eliminate it.
Why the ratio beats accuracy
A trader who wins half the time but makes twice as much on winners as they lose on losers has positive gross arithmetic expectancy under those assumed payoffs, with potentially large drawdowns; a trader who wins 70% of the time but lets losers run bigger than winners bleeds out. A planned payoff ratio alone does not establish an edge – see Risk/reward ratio and Risk per trade for the full framework.
Frequently asked questions
What is a good risk/reward ratio?
What does break-even win rate mean?
Which pip size should I select?
Planned R:R versus strategy performance
With entry 1.1000, SL 1.0980 and TP 1.1050, risk is 20 pips, reward 50 pips and the ratio 1:2.5. The before-cost break-even rate is 28.57%, conditional on actually realising those payoffs. A farther target can reduce hit probability; increasing planned R:R alone does not create an edge. For example, 65% × 0.8R − 35% × 1R = 0.17R gross, whereas 20% × 3R − 80% × 1R = −0.20R. Deduct costs in the expectancy calculator. Pip size changes the displayed distances, not the ratio between them.
