What is risk-reward ratio? Risk-reward ratio compares the potential loss of a trade to its potential gain. A 1:2 ratio means you risk $1 to make $2. The breakeven win rate is calculated as 1 divided by (1 plus the R:R ratio) times 100. At 1:2 R:R, you only need to win 33.3% of your trades to break even. Professional traders use risk-reward analysis to ensure each winning trade more than compensates for losing trades, creating a positive expected value over time.
Risk-Reward Calculator
Visualize your R:R ratio, see the breakeven win rate you need, and check expected value at different win rates. Enter entry, stop loss, and up to 3 take profit targets.
- 100% free, no sign-up
- Instant breakeven + EV math
- Up to 3 take-profit targets
Risk-Reward Calculator
Visualize your R:R and breakeven win rate
Trade Setup
Take Profit Targets
Why Risk-Reward Ratio Matters
A favorable R:R ratio means you can be profitable even with a low win rate. At 1:2, you only need to win 33% of your trades to break even. At 1:3, just 25%. Professional traders focus on R:R and position sizing as the foundation of their edge — not on winning every trade.
The expected value (EV) table shows your average profit per dollar risked at different win rates. A positive EV means the strategy is profitable over time. The higher your R:R, the more room you have for losing streaks while still growing your account.
How It Works
Enter Your Trade
Input your entry price and stop loss. The calculator auto-detects whether it's a BUY or SELL.
Set Take Profits
Add up to 3 take profit targets. TP1 is required; TP2 and TP3 are optional for scaled exits.
Read Your Edge
See R:R ratio, breakeven win rate, and expected value per dollar risked at 40-70% win rates.
Understanding Risk-Reward Ratio
Risk-reward ratio is the cornerstone of professional risk management. It measures how much you stand to gain relative to how much you are willing to lose on a single trade. A trade with a 1:2 R:R means your potential profit is twice your potential loss.
The mathematical beauty of R:R is that it directly determines the minimum win rate needed to be profitable. The formula is simple: Breakeven Win Rate = 1 / (1 + R:R) x 100. At 1:1, you need 50%. At 1:2, just 33.3%. At 1:3, only 25%. This means a trader with a modest 40% win rate can still be highly profitable with a 1:2 R:R.
R:R and Expected Value
Expected value (EV) combines R:R with your win rate to predict average profit per trade. The formula is: EV = (Win Rate x Reward) - (Loss Rate x Risk). A positive EV means your strategy makes money over time. This calculator shows EV per dollar risked, so you can instantly see whether a setup is worth taking.
For example, at 1:2 R:R with a 50% win rate, your EV is +$0.50 per $1 risked. Over 100 trades risking $100 each, that is $5,000 in expected profit — even though you lost half your trades.
Multiple Take Profit Targets
Many traders scale out of positions at multiple levels. Taking partial profits at TP1 locks in gains and reduces risk, while letting the remainder run to TP2 or TP3 maximizes upside. This calculator lets you evaluate the R:R at each target independently, helping you decide how to allocate your position across exit points.
Frequently Asked Questions
What is risk-reward ratio?
Risk-reward ratio (R:R) compares the potential loss of a trade to its potential gain. A 1:2 R:R means you risk $1 to potentially make $2. It is calculated by dividing the distance from entry to take profit by the distance from entry to stop loss. A higher R:R means each winning trade compensates for more losing trades.
What is a good risk-reward ratio?
Most professional traders target a minimum of 1:1.5 to 1:3. A 1:2 R:R is widely considered a strong baseline — it means you only need to win 33.3% of your trades to break even. The best ratio depends on your strategy: scalpers may accept 1:1 with a high win rate, while swing traders often aim for 1:3 or higher.
How does R:R affect win rate requirements?
R:R and win rate are inversely related for breakeven. The formula is: Breakeven Win Rate = 1 / (1 + R:R) x 100. At 1:1, you need 50% wins. At 1:2, you need 33.3%. At 1:3, just 25%. A higher R:R gives you more margin for error — you can lose more trades and still be profitable overall.
Should I always use a 1:2 risk-reward ratio?
Not necessarily. A rigid 1:2 target can cause you to set unrealistic take profit levels that the market rarely reaches, leading to frequent stop-outs on trades that would have been profitable at 1:1.5. The optimal R:R depends on the setup, volatility, and your strategy's historical win rate. The key is ensuring your R:R and win rate combination produces a positive expected value.
How do I calculate the breakeven win rate for my strategy?
Use the formula: Breakeven Win Rate = 1 / (1 + R:R). For a 1:1.5 ratio, breakeven = 1 / 2.5 = 40%. This means you need to win at least 40% of your trades to avoid losing money. Any win rate above breakeven generates profit. This calculator shows the breakeven line automatically for your chosen R:R.
What is expected value (expectancy) in trading?
Expected value is the average amount you expect to make (or lose) per trade over time. The formula is: EV = (Win Rate x Average Win) - (Loss Rate x Average Loss). A positive EV means your strategy is profitable long-term. For example, with 50% win rate and 1:2 R:R: EV = (0.50 x 2R) - (0.50 x 1R) = 0.5R profit per trade.
How do partial take-profits affect risk-reward ratio?
Partial take-profits (scaling out) reduce the effective R:R of a trade. If you close half your position at 1:1 and let the rest run to 1:3, the blended R:R is approximately 1:2. While scaling out locks in some profit and reduces stress, it also reduces overall expectancy compared to letting the full position hit your target.
Is risk-reward more important than win rate?
Neither is more important — they work together as a system. A 90% win rate with 1:0.1 R:R loses money because one loss wipes out nine wins. A 30% win rate with 1:4 R:R is profitable because each win covers multiple losses. Focus on the combination that gives you positive expectancy and that you can execute consistently.
Pair R:R Analysis with Real Signals
Now that you know your edge, apply it to verified trading signals from professionals with tracked performance. Every signal on SignalFloor includes entry, stop loss, and take profit — ready to analyze with this calculator.
Get Better at Trading
Free weekly trading insights, a structured execution checklist, and tips from verified providers. No spam — unsubscribe anytime.
Join 2,000+ traders · Free forever · No credit card