What is a good reward-to-risk ratio?
A ratio of 2:1 or higher is generally considered good. It means you can be wrong more often than right and still be profitable overall.
Tool 7
Reward to Risk Calculator
Find out whether a trade setup actually makes mathematical sense before you enter.
The reward-to-risk ratio compares how much you could gain versus how much you could lose on a trade. A 2:1 ratio means you stand to make $2 for every $1 at risk. This calculator shows your ratio, break-even win rate, and whether the setup is worth taking.
Calculator
Example Walkthrough
If you enter at 1.1000 with a stop at 1.0950 (50 pip risk) and a target at 1.1100 (100 pip reward), your reward-to-risk ratio is 2:1. You only need to win 33.3% of trades to break even. With a 50% win rate, you have a strong positive expectancy.
Common Mistakes
- Chasing setups with poor reward-to-risk ratios below 1:1.
- Moving stops further away instead of skipping the trade.
- Taking profits too early and letting winners become losers.
- Forgetting that a low win rate can still be profitable with good R:R.
Checklist Before Entering
- The reward-to-risk ratio is at least 1.5:1 or higher.
- I know my exact entry, stop, and target before placing the order.
- The target is within a realistic range based on market structure.
- I am comfortable with the break-even win rate required.
FAQ
What is break-even win rate?
The minimum win rate needed to not lose money. At 2:1 R:R, you need only 33% win rate. At 1:1, you need 50%.
Should I always take high R:R setups?
Not necessarily. High R:R setups may be rare or require wider stops that increase slippage risk. Balance frequency with ratio.
Can I use dollar amounts instead of prices?
Yes. Enter dollar risk and dollar reward directly if you already know those numbers from your position sizing calculation.
Related Tools
Next, use the Position Size Calculator and the Risk of Ruin Calculator.
Source note: formula logic is stored in assets/js/calculators.js. Last updated July 2026.