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Risk-Reward Calculator
Turn an entry, stop and target into risk distance, reward distance, RR ratio, breakeven win rate and optional expectancy.
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Risk-reward result
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Risk-reward ratio is reward distance / risk distance. For a long from 1.2000 with a 1.1950 stop and 1.2100 target, risk is 0.0050, reward is 0.0100 and RR is 2.0. The breakeven win rate is 1 / (1 + RR), so a 2R setup breaks even before costs at 33.33%.
How it works
What risk-reward measures
Risk-reward compares the distance from entry to stop with the distance from entry to target. It is a price-structure number: how much the trade can gain if the target is hit versus how much it loses if the stop is hit. It does not say how often either outcome will happen.
The formula
For a long trade: risk = entry - stop and reward = target - entry.
For a short trade: risk = stop - entry and reward = entry - target.
RR = reward ÷ risk
breakeven win rate = 1 ÷ (1 + RR) = risk ÷ (risk + reward)
If you enter a win rate W, expectancy in R is EV = W × RR - (1 - W). If you also enter a money risk amount, money expectancy is W × reward money - (1 - W) × risk money. When costs are entered in the same price units as the stop distance, net RR is reward ÷ (risk + costs).
How to use this calculator
- Choose long or short.
- Enter the entry, stop and target prices.
- Optionally enter an estimated win rate to calculate expectancy in R.
- Optionally enter a risk amount to convert expectancy into money.
- Add costs in price-distance units if you want the net RR estimate.
Worked example - a 2R long setup
For a long trade with entry 1.2000, stop 1.1950 and target 1.2100, the risk distance is 1.2000 - 1.1950 = 0.0050. The reward distance is 1.2100 - 1.2000 = 0.0100. So RR = 0.0100 / 0.0050 = 2.0, and the breakeven win rate is 1 / (1 + 2) = 33.33%.
Breakeven is a floor, not a target
The breakeven win rate only says where the simplified math reaches zero before unmodeled costs and execution effects. It is not a target win rate and not a quality label. A 2R setup with a very low actual win rate can still have negative expectancy; a lower RR setup with a high, stable win rate can have positive expectancy.
Common mistakes
- Reading RR alone. RR without win rate is incomplete. Expectancy needs both payoff size and hit rate.
- Ignoring direction. For a long, the stop must be below entry and the target above it. For a short, those signs reverse. This tool rejects direction mismatches.
- Leaving out costs. Spread, commission and slippage widen effective risk, so the net RR can be lower than the headline price distance suggests.
Frequently asked questions
How do I calculate risk-reward ratio?
entry - stop and reward is target - entry. For a short, the signs reverse.What is the breakeven win rate for a 2R trade?
1 / (1 + 2) = 33.33%. That is the simplified breakeven point, not a recommended or sufficient target.Why does the calculator reject my stop or target?
Does a higher RR mean a better trade?
How do costs affect RR?
reward / (risk + costs) when you enter costs in the same price units as the trade distance.