Risk:reward ratio calculator
The risk:reward ratio compares what you lose if your stop loss is hit with what you gain if your target is reached. Together with your win rate, it tells you whether a strategy can make money over many trades.
How it's calculated
Risk:Reward = |Entry − Stop loss| : |Take profit − Entry|. Break-even win rate = Risk ÷ (Risk + Reward)
Example: Buy EUR/USD at 1.1400 with a stop at 1.1370 (30 pips) and a target at 1.1490 (90 pips): 1:3. You only need to win 25% of trades like this to break even.
Questions
What is a good risk:reward ratio?
There is no single right number. 1:2 or better is a common guideline because it lets you be wrong more often than you are right and still come out ahead. A strategy with a high win rate can work with a lower ratio.
What does break-even win rate mean?
It is the share of trades you must win to neither make nor lose money, before costs. At 1:1 it is 50%, at 1:2 it is 33% and at 1:3 it is 25%.
Should I move my stop loss to improve the ratio?
Only if the new level still makes sense on the chart. A stop placed too close just to flatter the ratio tends to get hit by normal price noise.
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For education only. TradeBaazi is a trading simulator: no real money is traded, and nothing here is financial advice.