Risk to reward calculator
The ratio of a trade from its entry, stop and target, the win rate it needs just to break even, drawn as 100 trades, and what an average trade is worth at your own win rate.
Work it out from
From your journal, over 30 trades or more.
To turn R into money.
- Risk, in price
- 5
- Reward, in price
- 12.5
- Direction
- Buy (long)
Risk to reward
1:2.5
You need to win more than 28.6% of trades like this to come out ahead, before fees and slippage.
What you risk, against what you aim to make, to scale.
Out of 100 trades like this one, 28.6 must win just to break even. The other 71.4 can lose.
needed wins affordable losses
The formulas
Risk to reward = (target − entry) ÷ (entry − stop)
Breakeven win rate = 1 ÷ (1 + reward)
For a sell, the distances are measured downwards: entry minus target, stop minus entry. The ratio is written 1:x, where x is what the trade aims to make for every 1 it risks.
Breakeven win rate for common ratios
| Risk to reward | Must win more than | Average trade at 40% winners |
|---|---|---|
| 1:0.5 | 66.7% | -0.4R |
| 1:1 | 50% | -0.2R |
| 1:1.5 | 40% | +0R |
| 1:2 | 33.3% | +0.2R |
| 1:2.5 | 28.6% | +0.4R |
| 1:3 | 25% | +0.6R |
| 1:4 | 20% | +1R |
| 1:5 | 16.7% | +1.4R |
A good ratio is one your win rate can carry
A bigger ratio is not automatically better. Pushing the target further out raises the ratio, but price reaches far targets less often, so the win rate falls. What counts is the pair together: 1:3 at 20% winners loses money, 1:1.5 at 50% makes it.
The honest way to know your win rate is your own record of trades taken the same way. A trading journal of 30 trades or more says more than any rule of thumb, and the risk to reward of each trade only becomes meaningful next to it.
Expectancy: what an average trade is worth
Expectancy = win rate × reward − loss rate × 1
Measured in R, the amount risked per trade. Above zero, the method makes money on average over many trades; below zero it loses, however good single trades feel. Enter your win rate in the calculator to see it, and the same in money at your usual risk.