Risk-reward ratio calculator
The risk-reward ratio compares what a trade can lose with what it can make. Combined with your win rate, it tells you whether a strategy can survive at all.
By the TradeFather education team · Updated 27 Oct 2026 · Educational content, not financial advice
Risk-reward calculator
Break-even win rate ignores spread and commission, so your real hurdle is slightly higher. A strategy winning less often than this rate loses money over time even when individual trades feel good.
Results assume a USD account and 100,000-unit standard lots. Brokers can differ on contract size, spreads and commission, so confirm with your platform's own specification before trading.
- Reward:risk = take-profit distance ÷ stop-loss distance.
- Break-even win rate = 1 ÷ (1 + ratio). At 2:1 you only need to win 34% of trades before costs.
- Spread and commission raise the real break-even point above the calculator's number.
Ratio vs break-even win rate
The catch: bigger targets are hit less often. A 5:1 target that price almost never reaches is worse than a 1.5:1 target it reaches regularly. The ratio only works alongside an honest win rate from your journal.
| Reward : risk | Break-even win rate (before costs) | What it means |
|---|---|---|
| 1 : 1 | 50% | You must win more than half your trades |
| 1.5 : 1 | 40% | Losing 6 of 10 trades still breaks even |
| 2 : 1 | 33.3% | One winner covers two losers |
| 3 : 1 | 25% | Three losers per winner is fine — if winners hold to target |
Turn the ratio into a routine
- 1Mark entry, stop and target before entering
All three come from the chart, not from hope.
- 2Check the ratio
Many traders skip anything below 1.5:1.
- 3Size the position from the stop
Use the lot size calculator so the stop costs your planned risk.
- 4Record the result
After 30+ trades, compare your real win rate with the break-even rate.
Frequently asked questions
+What is a good risk-reward ratio?
There is no universal good ratio — it must match your win rate. A 1:1 strategy needs >50% winners; a 3:1 strategy can profit winning only a third of the time.
+Should I move my target further away to improve the ratio?
Only if the chart justifies it. Targets belong at real levels like support and resistance, not at whatever makes the ratio look nice.
+Does the ratio include spread?
No — the calculator uses your raw distances. On tight stops, subtract the spread from the target distance for a realistic figure.