Risk/reward (R:R) calculator

How the risk/reward ratio is calculated

The ratio compares what you can lose if the stop is hit against what you can gain if the target is reached. It is measured as distances from your entry, so it does not depend on position size: a 1:2 ratio is the same at 0.01 lots as at 5.

R:R = |Target − Entry| ÷ |Entry − Stop|

A worked example

You go long at 1.0850 with the stop at 1.0820 and the target at 1.0910. Risk is 30 pips and the move sought is 60, so the ratio is 2: for every unit risked you expect two. Move the target to 1.0880 and the ratio drops to 1.

Frequently asked questions

What counts as a good ratio?

There is no correct number: it depends on how often you are right. A low ratio can hold up with a high hit rate, and a high one tolerates being wrong more often. The two figures only mean something together, and they are yours, not a general rule's.

Does it include spread and commissions?

The calculator's ratio uses the prices you enter. Spread and commissions make the real outcome worse, and the shorter the trade the more they weigh. If you trade small distances it is worth looking at it with costs included.

Does it work the same when short?

Yes. The formula uses absolute distances, so direction makes no difference: the only change is that the target sits below the entry and the stop above it.

Other calculators

• Position size (lots)
• Pip value
• Margin / leverage
• Market sessions
• Drawdown and recovery
• Break-even point