Risk/Reward Ratio Calculator - Find Your Breakeven Win Rate Instantly
Instantly calculate your true risk-to-reward ratio and discover the exact minimum win rate your trading strategy needs to stay profitable. Essential for analyzing crypto and forex setups before entering a trade.
Risk/Reward Ratio Calculator
๐ก Why Use This Risk/Reward Ratio Calculator?
Many beginners obsess over having a 90% win rate, but professional traders know that win rate is completely useless without knowing your risk/reward ratio. If you're risking $100 to make $300 (a 1:3 ratio), you only need to win 25% of your trades just to break even! This calculator crunches the math on your entry, target, and stop loss so you can see exactly how realistic your trading edge actually is.
Pro Tip: Never adjust your stop loss just to 'force' a 1:2 or 1:3 ratio. Find the logical technical stop loss first. If that natural stop gives you less than a 1:1.5 ratio to your target, the optimal mathematical play is to simply skip the trade.
Frequently Asked Questions
What is a good risk reward ratio for day trading crypto?โบ
For day trading and scalping, a minimum of 1:1.5 to 1:2 (risking 1 to make 2) is the professional standard. Swing traders usually target much larger 1:3 or 1:4 ratios. You should never take a trade with a negative ratio (like risking $2 to make $1).
How do I calculate risk-reward ratio formula?โบ
The basic formula is R:R = (Take Profit Price โ Entry Price) รท (Entry Price โ Stop Loss Price) for long setups. Enter your prices into this calculator and it automatically handles both the long and short formulas for you.
What is the relationship between win rate and risk reward ratio?โบ
They are inversely correlated for profitability. If you have a high R:R like 1:4, you can survive on a low win rate (25-30%). If you have a low R:R like 1:1, you must maintain a very high win rate (over 50%) to avoid losing money. This calculator instantly displays the breakeven win rate for your setup.
What does trading expectancy mean?โบ
Trading expectancy combines your win rate and your average risk/reward into a single number that tells you how much you expect to make (or lose) per trade on average over time. Positive expectancy means your system is a mathematical winner.
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