TOOLS · CALCULATOR
Forex Risk-Reward Calculator
Type your entry, stop-loss and take-profit. The calculator shows the ratio, both distances in pips and the win rate a trade like this needs just to break even.
By FirstPip editorial team · Updated 2026-10-16 · Educational content · No broker owns this site
Quick answer. The risk-reward ratio is the take-profit distance divided by the stop-loss distance. Buying EUR/USD at 1.1000 with a stop at 1.0980 and a target at 1.1040 risks 20 pips to make 40, a ratio of 1 : 2, which needs a win rate above 33.3% to break even before costs.
Risk-reward calculator
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This calculator does the arithmetic on the prices you type. It does not know your broker's spread or commission, and it cannot tell you how likely the target is. It is not advice on whether to take a trade.
How is the risk-reward ratio calculated?
The risk-reward ratio compares two distances on the same trade: how far price must move against you to reach your stop-loss, and how far it must move in your favour to reach your take-profit. Divide the second by the first.
Reward per unit of risk = |take-profit − entry| ÷ |entry − stop-loss|
Break-even win rate = 1 ÷ (1 + reward per unit of risk)
Worked example. Buy EUR/USD at 1.1000 with a stop at 1.0980 and a target at 1.1040. The stop is 20 pips away and the target 40 pips away, so the trade risks 1 to make 2: a ratio of 1 : 2. The break-even win rate is 1 ÷ (1 + 2) = 33.3%. Win fewer than one trade in three like this and you lose money over time, even before costs.
Traders often count the stop distance as one unit of risk, written 1R. A trade that reaches a target twice as far away returns +2R; one that hits its stop returns −1R. Measuring in R lets you compare trades on different pairs and account sizes. Our lesson on the risk-reward ratio covers this in more depth.
What win rate do you need for each ratio?
| Risk-reward ratio | Break-even win rate (before costs) | Result at a 40% win rate, per trade |
|---|---|---|
| 1 : 1 | 50.0% | −0.20R |
| 1 : 1.5 | 40.0% | 0.00R |
| 1 : 2 | 33.3% | +0.20R |
| 1 : 3 | 25.0% | +0.60R |
| 1 : 4 | 20.0% | +1.00R |
The last column is the average result per trade over many trades at a 40% win rate: 0.4 × reward − 0.6 × 1R. It is arithmetic, not a forecast. Nothing here tells you whether you will actually win 40% of the time.
What does the ratio not tell you?
- How likely the target is. A target four times further away than the stop gives a ratio of 1 : 4, but price reaches distant targets less often. A big ratio with a low hit rate can lose money; a modest ratio with a high hit rate can make it.
- Your costs. You buy at the ask and sell at the bid, and some accounts pay commission. Both shave the reward and enlarge the loss, so the real break-even win rate is a little higher than the calculator shows.
- Whether the stop belongs there. The stop should sit where the trade idea is proven wrong, not where it makes the ratio look good. Moving the stop closer to improve the ratio usually just gets you stopped out more often. See our guide to the stop-loss.
- How much money is at risk. The ratio is the same on 0.01 lots and 5 lots. Size the position from your risk per trade with the position size calculator.
How do you use it before a trade?
- Decide where the idea is wrong and put the stop there.
- Decide a realistic target from the chart, not from the ratio you would like.
- Run both prices through the calculator and read the break-even win rate.
- Ask honestly whether trades like this win more often than that. If you do not know yet, practise on a demo account and record the results in a trading journal.
- Size the position so the stop costs only your chosen risk per trade.
Frequently asked questions
What is a good risk-reward ratio in forex?
There is no single good ratio, because the ratio only matters together with how often trades like this reach their target. A 1 : 2 trade needs to win more than 33.3% of the time to break even; a 1 : 1 trade needs more than 50%. Many beginner guides use 1 : 2 as a starting point, but a ratio you never reach is worth less than a smaller one you reach often.
How do I calculate the break-even win rate?
Divide 1 by (1 + the reward per unit of risk). For a 1 : 3 trade that is 1 ÷ 4 = 25%. Spread and commission make every loss a little larger and every win a little smaller, so the real break-even win rate is slightly higher than this figure.
Should I move my stop closer to get a better ratio?
Not just to improve the number. The stop belongs where the trade idea is proven wrong. Pulling it closer makes the ratio look better on paper but usually means being stopped out more often by normal price movement, which lowers your win rate.
Does the ratio change with position size?
No. The ratio depends only on the three prices. Position size decides how much money one unit of risk is worth, which is why you size the trade separately from your risk per trade.
Keep going
Sources
- BabyPips Forexpedia — Reward-To-Risk Ratio (RRR): definition and calculation (checked 2026-10-16)
- FirstPip — Risk-reward ratio lesson (break-even win rate = 1 ÷ (1 + reward per unit of risk))
- FirstPip knowledge base — risk/win-rate-vs-expectancy, risk/risk-reward-and-partial-profits (S001, S002): win rate is meaningless without the size of wins versus losses