Risk-reward calculator

The inputs are pre-filled with neutral sample values. Change any field and the result next to the inputs updates. The sample values only show how the tool works. They are not a trade idea.

What the risk reward ratio means

The risk reward ratio (R:R) compares the possible loss on a trade with the possible gain, both measured from the entry price:

• Risk is the distance from entry to the stop-loss, the price where you plan to close at a loss.
• Reward is the distance from entry to the target, the price where you plan to take profit.

A ratio above parity means the planned gain is larger than the planned loss. A ratio below parity means the planned loss is larger. The ratio says nothing about how likely the target or the stop is to be reached.

Formula used by the calculator

For a buy (long) trade:

R:R = (target − entry) / (entry − stop)

For a sell (short) trade, the distances are reversed:

R:R = (entry − target) / (stop − entry)

Money at risk and potential result use the same distances, converted to money:

• Money at risk = (entry − stop distance) × value of a price move per lot × lot size
• Potential result = (target − entry distance) × value of a price move per lot × lot size
• Break-even win rate = risk ÷ (risk + reward), shown as a percentage

The value of a price move per lot depends on the instrument and your account currency. If you are not sure of it, check it with the pip value calculator.

How to read the results

• R:R ratio shows the reward for each unit of risk.
• Money at risk is what you lose if the stop-loss is hit at your stop price. In fast markets, the fill can come at a worse price than the stop (slippage), so the real loss can be larger.
• Potential result is the gain if the target is filled at your target price.
• Break-even win rate is the share of trades that would need to reach the target, at this ratio, for wins and losses to cancel out before costs. Spread, commission and swap push the real break-even rate higher. The trade cost calculator shows those costs.

A higher ratio lowers the break-even win rate. A target further away is usually reached less often, though, so a high ratio on its own does not make a trade better.

Using the ratio in a plan

Many traders set the money at risk first and then size the position to fit it. The lot size calculator works from that side. To see how a series of wins and losses at a given ratio and win rate might play out, use the trade series simulator or the break-even win rate calculator. The page on risk management covers stop placement and position sizing in more detail.

Leveraged forex and CFD trading can lose money fast, including more than a single planned stop if prices gap. A calculator only shows your plan. It does not change the market.

Frequent questions

What is a good risk reward ratio?

No ratio is right for every case. The ratio only matters together with how often your trades reach the target. Compare it with your own recorded win rate and include trading costs.

Does the calculator work for gold, indices and crypto CFDs?

Yes. The ratio uses price distances, so it works for any instrument. For money at risk, enter the correct value of a price move per lot for that instrument.

Why is my actual loss bigger than the money at risk shown?

Slippage, price gaps, spread widening, commission and swap can all add to the loss. The tool shows the loss at your exact stop price, before these costs.

Is a sell trade calculated differently?

For a sell, the stop is above the entry and the target is below it. The calculator measures the distances in that direction, so the ratio is still positive.