Calculators / Risk / reward
Risk/Reward Ratio Calculator
Enter your entry, stop-loss and take-profit to get the risk:reward ratio and the win rate you'd need just to break even.
Risk / reward
Turn a stop and a target into a ratio, and the win rate you would need just to break even.
Breakeven win rate is the hit rate at which this ratio nets zero before costs. Anything below it loses money over a long enough sample.
How risk/reward and breakeven win rate are calculated
Ratio = reward distance ÷ risk distance. A 20-pip stop with a 60-pip target is a 1:3 ratio (60 ÷ 20 = 3).
Breakeven win rate = 100 ÷ (1 + ratio). For that same 1:3 trade: 100 ÷ 4 = 25%. Win more than a quarter of trades taken at that ratio and, before spread/commission, you’re net positive over time.
Ratio and win rate are one number, not two
It’s common to hear “aim for at least 1:2” as a fixed rule, but the ratio only means something next to your actual win rate at that setup. A strategy with a 70% win rate doesn’t need 1:2 to be excellent — 1:0.8 already prints money at that hit rate. A strategy with a 25% win rate needs closer to 1:4 just to survive. The honest way to know which camp a setup falls into is to look at what actually happened the last 30–50 times you took it.
That’s the number a calculator can’t give you — it lives in your trade history. PipFlo tracks your real win rate and average R-multiple per setup, so “is this ratio working for me” has an actual answer instead of a guess.
Risk/reward questions
What is a good risk/reward ratio in forex?
There's no universal answer — it depends on your win rate. A 1:1 ratio needs a win rate above 50% to profit; a 1:2 ratio only needs about 34%; a 1:3 ratio needs about 25%. Many trend-following strategies target 1:2 or higher specifically so they can be wrong most of the time and still be profitable. What matters is that your ratio and your actual win rate, measured over enough trades, work together.
How do I calculate risk/reward ratio?
Divide your reward distance (entry to take-profit) by your risk distance (entry to stop-loss). A trade risking 20 pips to make 40 has a 1:2 ratio. You can measure the distances in pips or in raw price — the ratio comes out the same either way.
What does breakeven win rate mean?
It's the win rate at which a given risk/reward ratio nets to zero, ignoring spread and commission: 100 ÷ (1 + reward/risk). At 1:2, that's 100 ÷ 3 = 33.3% — win a third of your trades at that ratio and you break even before costs; win more than a third and you're profitable. It reframes "is this a good ratio" into "what win rate do I actually need", which is the more useful question.
Does a higher risk/reward ratio always mean a better trade?
No — a very wide take-profit relative to your stop is only good if price realistically reaches it often enough. Stretching for 1:5 on a setup that structurally hits target 10% of the time is worse than taking 1:1.5 on a setup that hits 60% of the time. The ratio and the win rate it comes with have to be evaluated together, ideally against your own logged history rather than a rule of thumb.