Risk Reward Ratio Calculator
Calculate risk reward ratio with our free Risk reward ratio Calculator. Compare rates, see projections, and make informed financial decisions.
Formula
Risk:Reward = (Take Profit - Entry) / (Entry - Stop Loss)
Divide the distance from entry to take profit (reward) by the distance from entry to stop loss (risk). A 1:3 ratio means your potential reward is 3 times your potential risk. Combined with win rate, this determines your trading expectancy — the average profit per trade over time.
Worked Examples
Example 1: ICT Silver Bullet Setup
Problem: Long EUR/USD: Entry 1.0850, Stop Loss 1.0820, Take Profit 1.0940. Win rate: 45%.
Solution: Risk = 1.0850 - 1.0820 = 30 pips\nReward = 1.0940 - 1.0850 = 90 pips\nRR = 90/30 = 1:3\nBreak-even WR = 1/(1+3) = 25%\nWith 45% WR > 25% break-even → Profitable setup\nExpectancy (risking $100): (0.45 × $300) - (0.55 × $100) = $135 - $55 = $80 per trade
Result: RR: 1:3 | Break-even: 25% | Your 45% WR = Profitable (+$80/trade avg)
Example 2: Scalping Setup
Problem: Short GBP/USD: Entry 1.2650, Stop Loss 1.2665, Take Profit 1.2630. Win rate: 65%.
Solution: Risk = 1.2665 - 1.2650 = 15 pips\nReward = 1.2650 - 1.2630 = 20 pips\nRR = 20/15 = 1:1.33\nBreak-even WR = 1/(1+1.33) = 43%\nWith 65% WR > 43% break-even → Profitable\nExpectancy (risking $100): (0.65 × $133) - (0.35 × $100) = $86.45 - $35 = $51.45
Result: RR: 1:1.33 | Break-even: 43% | Your 65% WR = Profitable (+$51/trade avg)
Frequently Asked Questions
What is a good risk-reward ratio for trading?
A minimum of 1:2 risk-reward ratio is recommended by most professional traders, meaning your potential profit is at least twice your potential loss. With a 1:2 RR, you only need to win 33.3% of trades to break even. ICT (Inner Circle Trader) methodology often targets 1:3 or higher. However, the 'best' ratio depends on your win rate — a scalper with 70% win rate can profit with 1:1 RR, while a swing trader with 40% win rate needs at least 1:2 RR. The key is that your RR ratio combined with your win rate produces positive expectancy.
How do I calculate risk-reward ratio?
Risk-Reward Ratio = (Take Profit Distance) / (Stop Loss Distance). Measure the distance from your entry to stop loss (risk) and entry to take profit (reward), both in pips or price. Example: Entry at 1.0850, Stop Loss at 1.0820 (30 pips risk), Take Profit at 1.0940 (90 pips reward). RR = 90/30 = 1:3. This means for every $1 you risk, you stand to gain $3. Always calculate RR before entering a trade — it's one of the most important metrics in trading.
Should I always aim for a 1:3 risk-reward?
Not necessarily. The ideal RR depends on your strategy and market conditions. Scalping strategies might use 1:1 or 1:1.5 with 60-70% win rates. Day trading with ICT concepts often targets 1:3 to 1:5. Swing trading can target 1:5 to 1:10 on larger moves. The key insight: there's a trade-off between RR and win rate. Higher targets mean fewer winners (price has to move further), while tighter targets hit more often. Find the RR that maximizes your expectancy based on backtesting.
What are the different lot sizes in forex and how do they affect risk?
A standard lot is 100,000 units, a mini lot is 10,000, a micro lot is 1,000, and a nano lot is 100 units of the base currency. Smaller lots reduce your dollar-per-pip exposure, making them suitable for beginners or smaller accounts.
How do I calculate position size for proper risk management?
Determine your risk per trade (typically 1-2% of account balance), set your stop-loss distance in pips, then divide the dollar risk by the pip value to get the correct number of lots. This ensures consistent risk regardless of the pair or stop-loss width.
Is my data stored or sent to a server?
No. All calculations run entirely in your browser using JavaScript. No data you enter is ever transmitted to any server or stored anywhere. Your inputs remain completely private.