Understand risk and reward
Risk/Reward Calculator
Compare how far a hypothetical target is from the entry with how far the stop is. It is a math example, not a recommended trade.
Your example
Simple formula
Target distance÷stop distance=reward : risk
Break-even win rate = risk ÷ (risk + reward). It excludes spread, commissions and slippage, and a stop order does not guarantee an exact exit price.
Beginner guide
How to use the Risk/Reward Calculator
The risk/reward ratio compares how far a planned target is from the entry with how far the stop is. This calculator shows that relationship for prices you enter. It does not say whether any trade is a good idea.
- 1
Choose the direction
A buy needs a stop below the entry and a target above it. A sell is the reverse.
- 2
Enter the entry price
Use the price where the example trade opens.
- 3
Add the stop and target
The stop marks the planned loss distance. The target marks the planned gain distance.
- 4
Read the ratio
A ratio of 1 : 2 means the target is twice as far from the entry as the stop.
Worked example
A buy at 1.0850 with a stop at 1.0825 and a target at 1.0900 risks 25 pips to aim for 50 pips. That is a ratio of 1 : 2, with a break-even win rate of about 33.3% before costs.
50 pips ÷ 25 pips = 1 : 2.00
What the result means
A higher ratio does not make a trade more likely to work. The break-even win rate only shows how often the example would need to win to cover its losses, ignoring costs. A stop does not guarantee an exit price.