Risk/reward calculator
See what the setup needs to break even.
Calculator
Worked example
A long trade with the target further from the entry than the stop, and a win rate below one in two. These are the calculator's default inputs and the result it returns for them.
| Entry price | $100 |
|---|---|
| Stop price | $98 |
| Target price | $106 |
| Expected win rate | 40% |
| Reward/risk | 3.00R |
| Breakeven win rate | 25.0% |
| Expectancy | +0.60R |
Your win rate is +15.0 points above breakeven.
Questions
- What is the risk/reward ratio?
- It is the distance from entry to target divided by the distance from entry to stop. A ratio of 3R means the target pays three times what the stop costs.
- What does the breakeven win rate tell me?
- It is the win rate at which the setup neither makes nor loses money before costs. You need to win more often than this for a positive expectancy.
- What is a common mistake?
- Picking a far target just to get a high ratio. A far target is usually hit less often, so the win rate you enter should come from trades with the same kind of target.