Every trade you take should have a clearly defined risk/reward ratio before you enter. This calculator shows you the exact R:R ratio, the breakeven win rate you need, and a visual chart of your trade setup. Use it to evaluate whether a trade is worth taking before you commit capital.
Risk/Reward Calculator
Understanding Risk/Reward Ratios
The risk/reward ratio compares the potential loss to the potential gain of a trade. A 1:2 ratio means you stand to gain twice what you risk. Professional traders rarely take trades below 1:1.5, and many only enter positions with 1:2 or better.
The mathematical advantage of favorable R:R ratios is powerful. With a 1:3 ratio, you only need to win 25% of your trades to break even. This means you can be wrong on three out of every four trades and still not lose money. Combined with a win rate above the breakeven threshold, this creates a statistical edge that compounds over hundreds of trades.
How to Use This Calculator
Enter your planned entry price, stop loss, and take profit. The calculator computes the ratio, shows the breakeven win rate, and draws a visual chart of the trade setup. If the ratio is below 1:1.5, reconsider the trade or adjust your levels. Always define your stop loss and take profit before entering any position.
The Visual Trade Chart
The chart below the results shows your entry (white), stop loss (red zone), and take profit (green zone) positioned proportionally. This visual representation helps you quickly assess whether the reward justifies the risk and whether your levels make sense relative to price structure.
Frequently Asked Questions
What is a good risk/reward ratio?
A minimum of 1:2 is generally recommended. Many professionals target 1:3 or higher. The higher the ratio, the fewer winning trades you need to be profitable.
How do you calculate risk/reward ratio?
Divide the distance from entry to take profit by the distance from entry to stop loss. If entry is 1.1000, SL is 1.0950, TP is 1.1100: reward 100 pips / risk 50 pips = 1:2.
What is breakeven win rate?
The minimum win rate to break even: 1 / (1 + R:R ratio). For 1:2, that is 33.3%. You only need to win 1 in 3 trades.
Should I always aim for high ratios?
Not necessarily. Higher ratios mean wider take profits that are hit less often. Balance ratio with your strategy's actual win rate.
Disclaimer: This tool is for educational purposes only. Trading involves significant risk. Contains affiliate links.