Risk/Reward Calculator
Calculate your R:R ratio, dollar risk, and optimal position size before every trade.
Risk/Reward Ratio
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Dollar Risk
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Dollar Reward
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Position Size
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Pips to Stop Loss
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Pips to Take Profit
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SL vs TP Distance
SLEntryTP
What Is a Risk/Reward Ratio?
The risk/reward ratio (R:R) compares how much you stand to lose if a trade hits your stop loss against how much you stand to gain if it hits your take profit. A 1:2 ratio means you're risking $1 to potentially make $2. This single number, calculated before you enter a trade, is one of the clearest signals of whether a setup is worth taking.
How Risk/Reward Connects to Win Rate
A good R:R ratio does not guarantee profitability on its own -- it has to be weighed against your win rate. The breakeven win rate for any R:R ratio is: 1 Γ· (1 + R:R). At a 1:2 ratio, you only need to win 33% of trades to break even; anything above that is profitable. At 1:1, you need a 50% win rate just to break even.
| R:R Ratio | Breakeven Win Rate |
|---|---|
| 1:1 | 50% |
| 1:2 | 33.3% |
| 1:3 | 25% |
| 1:4 | 20% |
Frequently Asked Questions
What is a good risk/reward ratio for forex trading?
Most professional traders target a minimum of 1:1.5 to 1:2, meaning the potential reward is at least 1.5-2x the risk. This gives a margin for a win rate below 50% to still be profitable overall.
Can I be profitable with a win rate below 50%?
Yes. With a 1:2 risk/reward ratio, you only need to win 33% of trades to break even -- anything above that is profitable. Win rate and risk/reward must always be considered together, never in isolation.
How do I calculate position size from my risk/reward setup?
Once you know your dollar risk (account balance Γ risk %) and your stop-loss distance in pips, divide the dollar risk by (pips Γ pip value) to get your lot size. This calculator does that automatically using the Position Size field above.
Should I move my stop loss to improve my risk/reward ratio?
No -- your stop loss should be placed based on technical structure (beyond a swing high/low, outside normal volatility), not moved arbitrarily to make the R:R ratio look better. A technically sound stop with a 1:1.3 ratio is safer than a tight, arbitrary stop claiming 1:3.