Risk Reward Calculator
Turn entry, stop and target into a ratio, and see the win rate that ratio needs to break even.
Rayner5 min read24 September 2026A risk reward calculator settles an argument that traders often have with themselves. A setup that looks good on the chart can still be a poor trade if the stop is far away and the target is close, and the ratio makes that obvious in one number.
The tool below turns three prices into a ratio and the win rate it needs. Under it are the arithmetic, the table of break even win rates, the effect of costs, and why a high ratio is not automatically better.
A risk reward calculator compares the distance from entry to stop with the distance from entry to target. A ratio of 1 to 3 means risking one unit to make three. Each ratio implies a break even win rate: 1 to 1 needs 50 percent, 1 to 2 needs 33 percent and 1 to 3 needs 25 percent, before costs.
The calculator
Enter the three prices as you would place them. For a buy the stop sits below the entry and the target above it, and the calculator will tell you when that is the wrong way round.
Break even win rates
| Risk to reward | Break even win rate | Win rate needed for a real edge |
|---|---|---|
| 1 to 0.5 | 67 percent | Above 70 percent |
| 1 to 1 | 50 percent | Above 55 percent |
| 1 to 2 | 33 percent | Above 38 percent |
| 1 to 3 | 25 percent | Above 30 percent |
| 1 to 5 | 17 percent | Above 22 percent |
The second column is arithmetic. The third is the practical version, allowing for costs and the trades that close early or slip.
How costs change the picture
Every trade starts slightly behind because of the spread, and a tight stop makes that worse in proportion.
| Stop distance | Spread of 1 pip | Effect |
|---|---|---|
| 10 pips | 10 percent of the risk | Severe |
| 30 pips | 3.3 percent | Noticeable |
| 100 pips | 1 percent | Minor |
This is why scalping needs the tightest spreads available, a point covered in our scalping guide.
Why a high ratio is not automatically better
| Approach | Typical ratio | Typical win rate | The trade off |
|---|---|---|---|
| Scalping | 1 to 1 or less | High | Costs matter most |
| Intraday | 1 to 1.5 to 1 to 2 | Moderate | Balanced |
| Swing trading | 1 to 3 and above | Lower | Long losing runs are normal |
Stretching a target to improve the ratio does not improve the trade if price was never likely to reach it. The ratio has to be earned from the chart, not chosen from a preference.
Losing runs at each win rate
| Win rate | Chance of five losses in a row |
|---|---|
| 60 percent | About 1 percent |
| 50 percent | About 3 percent |
| 40 percent | About 8 percent |
| 30 percent | About 17 percent |
Over a hundred trades, each of those becomes near certain at some point. A strategy with a 1 to 3 ratio and a 30 percent win rate is profitable and will still lose six or seven times in a row, which is a risk of quitting rather than a risk of ruin, as long as size is small.
Using the ratio in practice
- 01Place the stop firstAt the level that proves the idea wrong, not at a round number.
- 02Place the target secondAt the level price is likely to reach, not at a preferred ratio.
- 03Check the ratioIf it is below 1 to 1, the setup usually needs a better entry.
- 04Size the positionFrom the stop distance, using the lot size calculator.
- 05Record the resultThe realised ratio after costs is the number that matters.
Our published signals carry all three levels, which is what makes them measurable: see how forex signals work.
Keep reading
- Forex profit calculator what the move pays
- Lot size calculator sizing from the stop
- Drawdown calculator what a losing run costs
- Trading tools every calculator on the site
Frequently Asked Questions
What is a good risk reward ratio?
It depends on the strategy. Around 1 to 2 suits most intraday trading, while swing traders often aim for 1 to 3 or more with a lower win rate.
What is a break even win rate?
The share of trades that must win for a strategy to break even at a given ratio. At 1 to 2 it is 33 percent, before costs.
How do you calculate risk to reward?
Divide the distance from entry to target by the distance from entry to stop. A 30 pip stop and a 90 pip target is 1 to 3.
Does a higher ratio mean a better strategy?
No. Higher ratios usually come with lower win rates and longer losing runs. What matters is whether the ratio is achievable on the chart.
How do costs affect the ratio?
Spread, commission and slippage all eat into the reward and add to the risk, so the real break even win rate is always higher than the arithmetic one.
Should I move my stop to improve the ratio?
No. Moving a stop closer to make the ratio look better usually means it sits where normal noise will hit it.
What ratio do your signals use?
Each signal publishes an entry, a stop and three staged targets, so the ratio is visible before the trade and measurable afterwards.
