Tool
Risk/Reward Calculator
Enter your entry price, stop loss, and take profit to instantly calculate your risk-reward ratio and the minimum win rate you need to be profitable.
What Is a Good Risk-Reward Ratio?
A minimum 1:2 risk-reward ratio is widely recommended. This means for every pip you risk, you target at least 2 pips of reward. With a 1:2 ratio you only need to win 33.3% of your trades to break even, which gives most strategies a comfortable profitability margin. Many professional traders aim for 1:3 or higher, reducing the required win rate to just 25%.
Risk
30 pips
Reward
60 pips
R:R Ratio
1:2
Break-Even Win Rate
33.3%
A 1:2 risk-reward ratio is favourable. You only need to win 33.3% of your trades to break even, giving your edge room to generate profit over time.
Understanding Risk-Reward Ratios
The risk-reward ratio compares the amount you stand to lose (risk) with the amount you stand to gain (reward) on a single trade. It is expressed as 1:N, where N is how many units of reward you get for each unit of risk.
For example, if you risk 30 pips with a stop loss and target 60 pips of profit, your risk-reward ratio is 1:2. This is one of the most fundamental concepts in trading because it determines how often you need to be right to make money.
The Relationship Between R:R and Win Rate
Your required break-even win rate is calculated as: 1 / (1 + Reward/Risk). At a 1:1 ratio you need to win 50% of trades. At 1:2, you need only 33.3%. At 1:3, just 25%. This mathematical relationship is why experienced traders prioritise R:R over win rate -- a strategy that wins only 40% of the time can still be highly profitable if each win is three times larger than each loss.
Common Risk-Reward Benchmarks
| Ratio | Break-Even Win Rate | Common Use |
|---|---|---|
| 1:1 | 50.0% | Scalping, high-frequency |
| 1:1.5 | 40.0% | Day trading |
| 1:2 | 33.3% | Swing trading (recommended minimum) |
| 1:3 | 25.0% | Position trading, trend following |
| 1:5 | 16.7% | Breakout trading, high conviction |
Tips for Improving Your Risk-Reward Ratio
Place stops at technical levels. A stop loss should be placed beyond a support or resistance level, not an arbitrary number of pips. This reduces the chance of being stopped out by noise while keeping risk tight.
Let winners run. Many traders cut profits too early. Using a trailing stop or scaling out of positions allows you to capture larger moves when the market trends in your favour.
Avoid revenge trading.After a loss, the temptation is to widen your take profit or tighten your stop to “make it back.” This distorts your R:R and leads to inconsistent results.