Trade planning
Risk/reward calculator
The risk/reward ratio sets the potential gain of a trade against its potential loss. A 1:2 ratio means the target is twice as far from the entry as the stop-loss. Together with your win rate it decides whether a trading approach can be profitable over many trades.
Result
Fix the highlighted field to see the result.
How it is calculated
Risk = |entry − stop-loss|Reward = |target − entry|Ratio = reward ÷ risk, shown as 1:ratio
Worked example
Buy at 1.1000 with a stop-loss at 1.0950 and a target at 1.1100: risk 0.0050, reward 0.0100, ratio 1:2.
Assumptions and practical examples
This page writes risk:reward as 1:2 when the possible target gain is twice the stop distance. The reciprocal expression reward/risk is 2. Keep the convention explicit when comparing another platform.
An illustrative short entry at 1.1000, stop at 1.1050 and target at 1.0900 has a 50-pip risk and 100-pip target, or 1:2 before costs. A ratio describes a plan, not the probability that either price will be reached.
Questions
What is a good risk/reward ratio?
There is no universal answer. A lower ratio needs a higher win rate to break even; the break-even calculator shows the win rate each ratio needs.
Why does the calculator reject my stop-loss?
For a buy, the stop-loss must be below the entry and the target above it. For a sell it is the other way round.
Does the ratio change with position size?
No. The ratio depends only on the three prices. Position size changes the money amounts, not the ratio.
Results are estimates for education; your broker's contract specification and prices decide the real values. Trading leveraged products carries a high risk of losing money.