How do you calculate the risk to reward ratio?

Divide the reward by the risk. For a long trade, risk is entry minus stop-loss and reward is take-profit minus entry. For a short trade, risk is stop-loss minus entry and reward is entry minus take-profit. A long at 100 with a stop at 95 and a target at 110 risks 5 to make 10, a ratio of 1:2.

What is a good risk to reward ratio?

There is no single best ratio, because it only makes sense next to your win rate. A 1:2 trade breaks even at a 33.3% win rate and a 1:3 trade at 25%. Targets further away are reached less often, so a higher ratio usually comes with a lower win rate. What matters is that the two together give a positive expectancy.

What win rate do I need to be profitable?

More than 1 ÷ (1 + R), where R is your reward divided by your risk. At 1:1 that is above 50%, at 1:2 above 33.3% and at 1:3 above 25%. Costs push the real figure a little higher, so leave some margin.

What is expectancy in trading?

Expectancy is the average amount a setup makes or loses per trade over many trades. In R it is win rate × R minus loss rate. At a 40% win rate and 1:3 trades it is 0.6R, so risking $100 per trade averages $60 per trade before costs. It says nothing certain about any single trade.

How does the risk to reward ratio fit a prop firm challenge?

On Velotrade the profit target is 10%, plus 5% in Phase 2 on CLASSIC 2-Step. The daily loss limit is 3% to 5% by plan, set from the higher of your balance or equity at 00:30 UTC, and the max drawdown is static at 3%, 7% or 10%. At 1% risk, a 1:2 win adds about 2%, so a positive expectancy with modest risk can reach the target without coming near the limits. It is a simulated evaluation, and there is no maximum risk per trade.

Is this risk reward calculator free?

Yes. It is free to use with no sign-up. To turn a stop distance into a position size, use the position size calculator, or the lot size calculator for forex.

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Free ToolUpdated October 5, 2026

Risk Reward Calculator

Enter your entry, stop-loss and take-profit to get the risk to reward ratio of a trade, the risk and reward in price and in percent, and the win rate you need to break even. Add your win rate to see the expectancy, and your account risk to see it in dollars.

Direction

Entry price

Stop-loss

Take-profit

Your win rate

Used for the expectancy. Use a figure from your own trade history if you have one.

Position size (optional)

Prices are examples. Works with any market: coins, shares or currency units. For forex, enter units, where 1 lot is 100,000.

Risk to reward ratio

1:3

Breakeven win rate 25%

Risk per unit

1,200

2% of entry

Reward per unit

3,600

6% of entry

Expectancy at 40% wins

+0.6R

$60.00 per trade on average

Win rate margin

+15 pts

your win rate minus breakeven

Money at risk

$100.00

0.0833 units

Money at target

$300.00

position value $5,000

Expectancy is a long run average over many trades, before spread and commission. On a Velotrade evaluation the daily loss limit is 3% to 5% by plan and the max drawdown is static, so keep the money at risk small next to both. To size this stop, use the position size calculator.

Trade this setup on a $10K evaluation· $100

One-time fee · Static drawdown · No time limit

Next: Position size calculatorSize every trade from your risk and stop distance.Next: Pass calculatorYour odds of passing from win rate, reward to risk and risk per trade.

How to use this calculator

Set direction and prices

Choose long or short, then enter the entry, the stop-loss and the take-profit. It works for forex, crypto, stocks and any other market.

Add your size

Optional. Enter your balance and risk percent, or a position size in units, to turn the ratio into dollars.

Check the win rate you need

You get the ratio, the breakeven win rate and the expectancy at the win rate you enter.

What these numbers mean

Risk to reward ratio: The reward divided by the risk, written 1:R. A 1:2 trade aims to make twice what it can lose.

Risk: The distance from entry to stop-loss. In dollars it is that distance times your position size.

Reward: The distance from entry to take-profit. In dollars it is that distance times your position size.

Breakeven win rate: The share of trades you must win for the setup to make nothing and lose nothing. It is 1 ÷ (1 + R).

Expectancy: The average result per trade over many trades, in R or in dollars. It is a long run average, not the result of the next trade.

R multiple: A result measured in units of risk. A win at 1:3 is +3R and a full stop-loss is -1R.

The risk to reward formula, with examples

R = Reward ÷ Risk, and breakeven win rate = 1 ÷ (1 + R)

For a long trade, risk is entry minus stop-loss and reward is take-profit minus entry. For a short trade both are reversed. R is how many times the risk the trade can make, so a 1:2 trade has R of 2. Expectancy is the average result per trade in R: win rate × R, minus loss rate × 1. Above zero the setup makes money over many trades, before costs.

Long BTC at 60,000, stop 58,800, target 63,600

Risk is $1,200 per coin (2%) and reward is $3,600 (6%), so the ratio is 1:3.
The breakeven win rate is 1 ÷ (1 + 3) = 25%. At a 40% win rate the expectancy is 0.4 × 3 minus 0.6 = 0.6R per trade.
Risking 1% of a $10,000 account, $100, means 0.0833 BTC, a $5,000 position, with an average of $60 per trade over many trades, before costs.

Short EURUSD at 1.1000, stop 1.1030, target 1.0940

Risk is 30 pips and reward is 60 pips, so the ratio is 1:2.
The breakeven win rate is 33.3%. At a 40% win rate the expectancy is 0.4 × 2 minus 0.6 = 0.2R per trade.
The edge is thinner than in the first example, so spread and commission take a bigger share of it.

When the reward is smaller than the risk

A 1:0.5 trade needs a win rate above 66.7% just to break even.
At 1:1 a 50% win rate gives an expectancy of zero, and costs turn it negative.
A lower ratio can still work, but only with a win rate you have measured over many trades.

The ratio tells you whether a setup is worth taking. The next step is how big to trade it: the position size calculator turns your stop distance and risk into a size, and the lot size calculator does the same in forex lots. To see how a win rate and ratio play out over a challenge, try the pass calculator.

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