Risk-to-Reward Calculator
Compare the distance to your stop loss with the distance to your target before entering.
Risk-to-reward ratio
1 : 2.00
- Risk distance
- 0.0050
- Reward distance
- 0.0100
- Break-even win rate
- 33.33%
- Direction
- Long
How this calculation works
How much price distance could you gain for each unit of planned price risk?
Formula in plain language
- Risk distance = absolute difference between entry and stop.
- Reward distance = absolute difference between target and entry.
- Reward-to-risk multiple = reward distance ÷ risk distance.
- Gross break-even win rate (%) = 100 ÷ (1 + reward-to-risk multiple).
What the terms mean
- Entry, stop and target
- The planned starting price, loss-side exit and gain-side exit. For a long trade, stop < entry < target; for a short trade, target < entry < stop.
- 1 : 2
- One unit of planned risk for two units of potential reward. This is a distance comparison, not a chance of winning.
Worked example
This is a fixed teaching example, separate from your current inputs.
Paper example: choose Long / Buy, entry 100, stop 90 and target 120. These are imaginary prices, not market quotes.
- Risk distance: 100 − 90 = 10.
- Reward distance: 120 − 100 = 20.
- Multiple: 20 ÷ 10 = 2, so the ratio is 1 : 2.
- Gross break-even rate: 100 ÷ (1 + 2) = 33.33%.
Example result: 1 : 2, with 10 units of risk distance and 20 units of reward distance.
What the result means
Think of comparing a possible 10-unit loss with a possible 20-unit gain. The break-even percentage assumes every loss is the full planned loss and every win is the full planned reward; it does not estimate your actual win rate.
What this does not tell you
Spread, fees, financing, slippage and partial exits change real break-even results. A stop is not a guaranteed fill, and a larger ratio does not make a trade more likely to succeed.