Risk-Reward Ratio Calculator
Calculate the risk-reward ratio for any trade. Enter your entry, stop loss, and take profit prices to see R:R ratio, breakeven win rate, and expectancy.
Track This Automatically with Disciplined
Disciplined calculates the R:R for every trade you log and tracks your average ratio over time. See which R:R ranges produce your best results.
- Real-time metric tracking
- Unlimited trade logging
- Professional analytics dashboard
- Free up to 50 trades
Understanding Risk-Reward Ratios
The Math Behind R:R
The risk-reward ratio is one of the most fundamental concepts in trading. Every trade is a bet with a defined risk and a potential reward. The ratio tells you whether the bet is mathematically worth taking.
R:R Ratio = |Take Profit − Entry| / |Entry − Stop Loss|
R:R and Breakeven Win Rate
The relationship between risk-reward ratio and the breakeven win rate is inverse. Higher R:R ratios require lower win rates to be profitable:
| R:R Ratio | Breakeven Win Rate | Common Strategy |
|---|---|---|
| 1:1 | 50.0% | Scalping |
| 1:2 | 33.3% | Day trading |
| 1:3 | 25.0% | Swing trading |
| 1:5 | 16.7% | Trend following |
Finding Your Optimal R:R
The optimal R:R isn't necessarily the highest one. It's the ratio that maximizes your expectancy — the combination of R:R and win rate that produces the highest expected value per trade. By logging your trades in a journal and tracking outcomes at different R:R targets, you can find the sweet spot for your specific strategy.
Frequently Asked Questions
What is a risk-reward ratio?▾
The risk-reward ratio compares the potential loss (risk) to the potential profit (reward) of a trade. A 1:3 ratio means you're risking $1 to potentially make $3. It's calculated as the distance from entry to stop loss divided by the distance from entry to take profit.
What is a good risk-reward ratio?▾
Most professionals aim for at least 1:2 (risking $1 to make $2). Higher ratios like 1:3 or 1:4 allow you to be profitable with a lower win rate. However, there's a trade-off: higher R:R targets are hit less frequently, so the optimal ratio depends on your strategy and win rate.
What is the breakeven win rate?▾
The breakeven win rate is the minimum win percentage needed to break even at a given risk-reward ratio. Formula: Breakeven = 1 / (1 + R:R). At a 1:2 ratio, you need just 33.3% win rate to break even. At 1:1, you need 50%.
Should I always use a high risk-reward ratio?▾
Not necessarily. A very high R:R (like 1:5) means your take profit is far from entry, which gets hit less often. The best approach is to find the R:R that maximizes expectancy for your specific strategy. Some scalpers profit at 1:1 with a 60%+ win rate, while swing traders prefer 1:3+ with a 35% win rate.