Risk/reward calculator
The risk-to-reward ratio compares the distance from entry to target against the distance from entry to stop. Divide the reward distance by the risk distance. An entry at 100 with a stop at 98 and a target at 106 risks 2 to make 6, a ratio of 3.00. The ratio also fixes the win rate needed to break even: one divided by one plus the ratio.
Calculate
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The formula
ratio = |target − entry| ÷ |entry − stop| breakeven win rate = 1 ÷ (1 + ratio) × 100
Distances are absolute, so the same arithmetic serves a long and a short. Inputs are unitless — prices, pips or points all give the same ratio.
Worked example
An entry at 1.10050, a stop at 1.10000 and a target at 1.10150:
- risk = |1.10050 − 1.10000| = 0.00050
- reward = |1.10150 − 1.10050| = 0.00100
- 0.00100 ÷ 0.00050 = 2.00 ratio
- 1 ÷ (1 + 2.00) = 0.3333 → 33.33% breakeven win rate
Illustrative figures, not a result from any account.
The breakeven bridge
The second output is the one worth keeping. A ratio of 1.00 needs 50.00% of trades to win just to stand still. A ratio of 2.00 needs 33.33%. A ratio of 3.00 needs 25.00%. Below a ratio of 1.00 the requirement climbs quickly: at 0.50 the record needs 66.67% of trades to win before it gains anything at all.
That figure is a floor, not a target. It assumes costs are already inside the numbers and that the ratio shown here is the one actually achieved on closed trades rather than the one intended at entry — those two are rarely the same.
What the ratio does not tell you
- Nothing about whether the target is reachable. A distant target produces a flattering ratio and may simply never be hit.
- Nothing about whether the stop survives normal movement. A tight stop flatters the ratio and gets hit more often.
- Nothing about costs, unless the prices entered already include them.
- Nothing about the planned-versus-actual gap. Ratios taken from intended levels describe intentions, not records.
Questions
Is a higher ratio always better?
No. Widening the target or tightening the stop both raise the ratio on paper while making the target less likely to be reached or the stop more likely to be hit. The ratio only means something alongside the win rate actually achieved.
What breakeven win rate does a 1:2 ratio need?
33.33%. One divided by one plus two is one third. Below that share of winners the record loses ground even though every individual win is twice the size of every individual loss.
Does this work for short trades?
Yes. The distances are absolute values, so a short with the stop above entry and the target below gives the same arithmetic. The page flags a stop and target on the same side of entry, because that is usually a typo.
Should I enter prices, pips or currency?
Any of them, as long as all three fields use the same unit. The ratio is a division of two distances, so the unit cancels out — which is why no currency symbol is shown anywhere on this page.
Related
Win rate calculator — Compare the breakeven figure above against the win rate a record actually achieved.
GoldenRock Analyser — computes this metric from recorded MT4 and MT5 trading history rather than from figures typed by hand. GoldenRock Analyser is an authenticated GoldenRock feature currently not enabled for general public access.
Position sizing and risk management — the decision this arithmetic does not make for you.
Risk disclosure — educational content only, not investment advice.