Risk Reward Calculator (RR Calculator)

How to use the risk reward calculator

1. Pick the pair. It sets the pip size: 0.01 for JPY pairs, 0.0001 for the rest.
2. Choose long or short and enter your entry, stop loss price and take profit price.
3. Read the pips at risk, the pips at reward, the risk reward ratio and the breakeven win rate. If the stop or target sits on the wrong side of the entry, the calculator says so instead of returning a ratio.

How to calculate the risk to reward ratio

For a long, risk is entry − stop and reward is target − entry; for a short, both are reversed. Divide each by the pip size, then divide reward by risk.

Example: short USD/JPY at 150.00 with a stop at 150.40 and a target at 149.20. Risk is 0.40 ÷ 0.01 = 40 pips, reward is 0.80 ÷ 0.01 = 80 pips, so the ratio is 1 : 2 and the breakeven win rate is 40 ÷ 120 = 33.3%.

Reading the R:R

R-multiple is reward divided by risk. A 1:2 setup means you stand to gain twice what you risk if the target is hit before the stop.

The breakeven win rate tells you how often the trade has to work for the strategy to be profitable in the long run, ignoring fees:

breakeven% = risk ÷ (risk + reward)

A 1:2 setup needs only ~33% wins to break even. A 1:1 needs 50%. A 2:1 (asymmetric losers) needs ~67% — which is why scalpers with thin targets need very high hit rates.

What is a good risk reward ratio?

There isn't one number. The ratio only means something next to your win rate, because together they give your expectancy per trade in R: win rate × reward − loss rate × 1. A 45% win rate at 1 : 2 earns +0.35R per trade; a 70% win rate at 1 : 0.8 earns +0.26R. Both work. A 30% win rate at 1 : 2 loses 0.10R per trade.

A wider target raises the ratio but is hit less often, so a 1 : 4 trade setup is not automatically better than a 1 : 1.5 one. Put the target where the market gives a reason (a level, a range edge), then check whether the ratio and your measured win rate still clear breakeven.

Common risk reward mistakes

• Moving the target to hit a ratio. A target placed to make the numbers look like 1 : 3 is not a 1 : 3 trade.
• Widening the stop after entry. The risk grows, the ratio shrinks, and the position size you set is no longer right.
• Ignoring costs. This calculator measures price distance only. Spread and commission come on top and matter most on short stops; the spread cost calculator puts a number on them.
• Confusing planned and realised R. Exiting early turns a planned 1 : 2 into a smaller win. Your journal's average R shows what you actually got.

FAQ

Is a 1:1 risk reward ratio profitable?

Only above a 50% win rate, before costs. At 55% it earns +0.10R per trade; at 50% it breaks even and spread makes it a small loss.

Should I skip a trade if the ratio is below 1:2?

Not automatically. A lower ratio works if your win rate for that setup is well above its breakeven. Skip it when your measured win rate doesn't clear the breakeven figure above.