Risk reward ratio calculator
Check whether a trade is worth taking before you enter: compare what you risk to what you could make, and see the win rate the setup needs.
Or try it on your chart first, no accountEducational tool, not financial advice. Excludes fees and slippage.
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How the calculation works
Risk is the distance from entry to stop loss. Reward is the distance from entry to target. The ratio is reward divided by risk. The break even win rate is 1 divided by (1 plus the ratio), before fees and slippage.
Example
A long at 100 with a stop at 96 and a target at 112 risks 4 to make 12, a 1 to 3 ratio. At 1 to 3 you break even if 25% of trades like it reach the target. Numbers are illustrative.
Use it with the chart
A ratio only means something if the stop sits where the idea is wrong and the target sits at a realistic level, such as the next resistance. Moving a target further away to improve the ratio does not make the trade better.
Questions
What is a good risk reward ratio?
Many traders look for at least 1 to 2, but the right ratio depends on your win rate. A high win rate strategy can work with lower ratios, and a low win rate needs higher ones.
What does break even win rate mean?
It is the share of trades that must hit the target, with the rest hitting the stop, for total profit to be zero before costs. At 1 to 1 it is 50%, at 1 to 2 it is about 33%.
Does it work for short trades?
Yes. Pick Short: the stop must be above entry and the target below it.
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