Free Risk Reward Calculator
Calculate your trade's risk reward ratio instantly. See your required win rate, expected value, and whether the trade is worth taking. Free R:R calculator for all markets.
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Risk reward ratio is the foundation of profitable trading. A 1:3 risk reward means you risk $1 to potentially make $3. With this ratio, you can be wrong 60% of the time and still profit.
Our free risk reward calculator helps you evaluate every trade before you take it. Calculate R:R, see your required win rate, and determine if the trade offers positive expected value.
What is Risk Reward Ratio?
Risk reward ratio (R:R) compares what you could lose to what you could gain on a trade.
Formula:
Risk Reward Ratio = (Entry Price - Stop Loss) / (Take Profit - Entry Price)
Or simply: R:R = Risk / Reward
Example:
Entry: 1.1000
Stop Loss: 1.0950 (50 pips risk)
Take Profit: 1.1150 (150 pips reward)
R:R = 50/150 = 1:3
This means for every $1 risked, you stand to make $3.
Why Risk Reward Ratio Matters
The Math of Profitability:
| R:R Ratio | Breakeven Win Rate | With 50% Win Rate |
|---|---|---|
| 1:1 | 50% | Breakeven |
| 1:2 | 33% | Profitable |
| 1:3 | 25% | Very Profitable |
| 1:4 | 20% | Highly Profitable |
Key Insight: With a 1:3 risk reward, you only need to win 25% of trades to break even. Win 40% and you're highly profitable.
Why Most Traders Fail:
They take 3:1 risk reward trades (risking $3 to make $1), requiring 75% win rate to profit. That's nearly impossible to maintain.
[Calculate Your Required Win Rate →](/tools/position-size-calculator)
What is the Optimal Risk Reward Ratio?
There's no single "best" R:R—it depends on your win rate and strategy:
Scalpers (60-70% win rate)
Optimal R:R: 1:1 to 1:1.5
Why: High win rate compensates for lower R:R
Example: Target 10 pips, stop 8 pips
Day Traders (50-60% win rate)
Optimal R:R: 1:1.5 to 1:2
Why: Balanced approach
Example: Target 30 pips, stop 15-20 pips
Swing Traders (40-50% win rate)
Optimal R:R: 1:2 to 1:3
Why: Larger moves compensate for lower win rate
Example: Target 200 pips, stop 75-100 pips
Position Traders (30-40% win rate)
Optimal R:R: 1:3 to 1:5+
Why: Big winners pay for multiple losers
Example: Target 500 pips, stop 100-150 pips
Calculating Expected Value (EV)
Expected value tells you if a trade is worth taking over time.
Formula:
EV = (Win Rate × Average Win) - (Loss Rate × Average Loss)
Example:
Win Rate: 45%
Average Win: $300 (3R)
Loss Rate: 55%
Average Loss: $100 (1R)
EV = (0.45 × $300) - (0.55 × $100) EV = $135 - $55 = +$80 per trade
Positive EV = Take the trade Negative EV = Skip the trade
Pro Tip: Track your actual win rate and average R:R over 100+ trades to calculate your true edge.
How to Improve Your Risk Reward
1. Better Entry Points
Enter closer to key levels to reduce stop loss distance while maintaining the same target.
2. Let Winners Run
Use trailing stops or partial take profits to capture larger moves.
3. Cut Losers Fast
Move to breakeven quickly and don't let small losses become big ones.
4. Be Selective
Only take trades with minimum 1:2 R:R. Skip everything else.
5. Use Multiple Timeframes
Find entries on lower timeframes for tighter stops while trading higher timeframe trends.
6. Scale Out Strategically
Take partial profits at 1R, let rest run. This locks in gains while capturing bigger moves.
Use Our Risk Calculator
Our Position Size Calculator includes comprehensive risk analysis:
Features:
Calculate exact dollar risk per trade
See position size for any risk percentage
Analyze losing streak impact
Risk assessment rating
How to Use:
1. Enter your account balance
2. Set your risk percentage (1-2%)
3. Enter stop loss distance in pips
4. See your exact position size and dollar risk
[Open the Risk Calculator →](/tools/position-size-calculator)
Frequently Asked Questions
What is a good risk reward ratio?
Minimum 1:2 is recommended for most traders. This means you need only 33% win rate to break even. Higher R:R like 1:3 gives you more room for error.
Is 1:1 risk reward profitable?
Only if your win rate exceeds 50%. After accounting for spreads and slippage, you likely need 55%+ win rate to profit consistently with 1:1 R:R.
How do I calculate R:R in pips?
Divide your stop loss pips by your take profit pips. If stop loss is 30 pips and take profit is 90 pips, your R:R is 30:90 or 1:3.
Should I always use the same R:R?
Not necessarily. Adjust based on setup quality and market conditions. A high-probability setup might warrant 1:1.5, while a lower probability setup needs 1:3+.
What's more important: win rate or R:R?
Neither alone—it's the combination that matters. High win rate with low R:R or low win rate with high R:R can both be profitable. Calculate your expected value to know your edge.
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