Risk/Reward Calculator
Evaluate any trade setup before you enter. See your risk-to-reward ratio and the minimum win rate needed to be profitable.
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Risk : Reward
1 : 2.50
Potential Loss
-$500.00
Potential Profit
+$1250.00
Risk per Unit
$5.00
Reward per Unit
$12.50
Break-even Win Rate
28.6%
What Is Risk/Reward Ratio?
The risk/reward ratio (R:R) compares how much you stand to lose versus how much you stand to gain on a trade. A ratio of 1:2 means you risk $1 to potentially make $2. A ratio of 1:3 means you risk $1 to potentially make $3.
Most professional traders aim for a minimum of 1:2. This means that even if you only win half your trades, you still come out ahead — because your winners are twice the size of your losers.
Break-even Win Rate
The break-even win rate tells you the minimum percentage of trades you need to win to avoid losing money at a given risk/reward ratio. At 1:1, you need to win more than 50%. At 1:2, you only need 33%. At 1:3, just 25%.
This is why experienced traders focus on the ratio, not just finding winners. A strategy that wins 40% of the time but maintains a 1:3 risk/reward is highly profitable. A strategy that wins 60% of the time with a 1:0.5 ratio loses money.