Risk-to-Reward Calculator
The ratio between what a trade risks and what it targets, and the win rate needed to break even at that ratio.
- Risk to reward
- 1:2.00
- Risk
- 30.0 pips
- Reward
- 60.0 pips
- Break-even win rate
- 33.3%
How it works
Risk-to-reward is the target distance divided by the stop distance. At 1:2 you risk one unit to make two, and a strategy at that ratio breaks even with a win rate of 33 percent before costs. The calculator shows the ratio for any entry, stop and target, and the break-even win rate, so you can see whether a trade's geometry makes sense before sizing it.
Neither the ratio nor the win rate means anything alone; together they set the expectancy, which Course 8 covers. A high ratio with a very low win rate and a low ratio with a very high win rate can both work, and both can fail.
The formula
Ratio = Target distance / Stop distance; Break-even win rate = 1 / (1 + Ratio)
Worked example
Buy EUR/USD at 1.1000, stop 1.0970, target 1.1060: 30 pips risked, 60 pips targeted, ratio 1:2, break-even win rate 33.3 percent.
Sell GBP/USD at 1.2700, stop 1.2740, target 1.2660: 40 pips risked, 40 targeted, ratio 1:1, break-even win rate 50 percent.
Frequently asked questions
Is a higher ratio always better?
No. Wider targets are reached less often, so higher ratios come with lower win rates. What matters is that the pair produces a positive expectancy over a large sample.
Should I include the spread?
For short-term trades, yes: add the spread to the stop distance and subtract it from the target distance, since you pay it on entry and exit.
Results are arithmetic on the figures you enter and reference exchange rates; check contract sizes and pip values against your broker's specification. General education, not advice.