Risk/reward calculator
A long position in gold with its stop one typical day's move below the entry and its target two away is a 2 : 1 setup, which breaks even with a win rate of 33.3% (GOLD at $4216.90, 12:33 UTC on 30 September 2026).
The ratio between what a setup risks and what it targets, the win rate it needs to break even, and what it is worth in money.
Risk/reward calculator
Break-even win rate and expectancy
Before spreads, commissions and financing
| Reward : risk | Break-even win rate | At 30% wins | At 40% wins | At 50% wins | At 60% wins |
|---|---|---|---|---|---|
| 0.5 : 1 | 66.7% | ▼ −0.55R | ▼ −0.4R | ▼ −0.25R | ▼ −0.1R |
| 1 : 1 | 50% | ▼ −0.4R | ▼ −0.2R | 0R | ▲ +0.2R |
| 1.5 : 1 | 40% | ▼ −0.25R | +0R | ▲ +0.25R | ▲ +0.5R |
| 2 : 1 | 33.3% | ▼ −0.1R | ▲ +0.2R | ▲ +0.5R | ▲ +0.8R |
| 2.5 : 1 | 28.6% | ▲ +0.05R | ▲ +0.4R | ▲ +0.75R | ▲ +1.1R |
| 3 : 1 | 25% | ▲ +0.2R | ▲ +0.6R | ▲ +1R | ▲ +1.4R |
| 4 : 1 | 20% | ▲ +0.5R | ▲ +1R | ▲ +1.5R | ▲ +2R |
| 5 : 1 | 16.7% | ▲ +0.8R | ▲ +1.4R | ▲ +2R | ▲ +2.6R |
Expectancy is the average result per trade in multiples of the amount risked (R): win rate × ratio − loss rate. A setup is only as good as the win rate it actually achieves, which no ratio can tell you.
How it works
Risk is the distance from the entry to the stop; reward is the distance from the entry to the target. Their ratio says how much a setup stands to make for each unit it stands to lose — a target twice as far as the stop is a 2:1 reward-to-risk setup.
The ratio on its own says nothing about how likely the target is. What it does fix is the win rate needed to break even: at 1:1 a setup must win half the time, at 2:1 a third of the time, at 3:1 a quarter. That break-even rate is shown before spreads, commissions and financing, all of which raise it.
Given an account balance and the percentage risked, the calculator also sizes the position and shows what the stop would lose and the target would gain in money, converted into the account currency at a live rate. Add a win rate and it shows the expectancy — the average result per trade — in multiples of the risk and in money.
It also checks direction. A long setup needs its stop below the entry and a short one above; a stop on the same side as the target would not limit a loss, and the result is flagged.
Formula: Reward : Risk = |Target − Entry| ÷ |Entry − Stop|. Break-even win rate = 1 ÷ (1 + ratio).
Questions
What is a good risk/reward ratio?
There is no single good ratio. A higher ratio needs a lower win rate to break even, but targets further away are typically reached less often. The two have to be considered together.
How do I calculate risk/reward?
Divide the distance from entry to target by the distance from entry to stop. An entry at 100, a stop at 95 and a target at 110 is a reward of 10 against a risk of 5, or 2:1.
What win rate do I need to break even?
One divided by one plus the reward-to-risk ratio: 50% at 1:1, 33.3% at 2:1 and 25% at 3:1, before trading costs.
What is expectancy in trading?
The average result per trade, measured in multiples of the amount risked (R): win rate × reward-to-risk ratio − loss rate. A 2:1 setup that wins 40% of the time has an expectancy of +0.2R — on average a fifth of the amount risked, per trade, before costs.
How much would I make or lose on this trade?
Enter an account balance and a risk percentage: the calculator sizes the position so the stop loses exactly that amount, and shows the gain at the target in your account currency, converted at a live rate.
For information only. These are calculations on the figures entered, not advice or a recommendation to trade. Leveraged products can lose more than the planned amount when prices gap through a stop.