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4TRD

Risk/Reward Calculator

Before you place a trade, calculate the risk/reward ratio and check whether the setup is statistically viable. Enter your entry, stop loss, and take profit prices to get a full analysis including expectancy at your historical win rate.

Risk/Reward Calculator

Evaluate trade quality and expected value

Must be below entry

Must be above entry

Used to calculate reward in account currency

Used to calculate statistical expectancy

Understanding Risk/Reward Ratios

The risk/reward ratio (RR) compares how much you could lose if the trade hits your stop loss versus how much you could gain if it hits your take profit.

A 1:2 RR means you risk 1 unit to make 2. A 1:3 RR means you risk 1 to make 3.

Minimum viable RR ratio

The minimum RR ratio you need depends on your win rate. Traders with a 50% win rate need at least a 1:1 RR to break even (ignoring spread/commission). With a 1:2 RR and 50% win rate, you are profitable.

Statistical Expectancy

Expectancy measures the average amount you expect to earn (or lose) per trade over time:

Expectancy = (Win Rate × Avg Win) − (Loss Rate × Avg Loss)

A positive expectancy means your strategy is profitable in the long run. This is the most important metric for evaluating a trading system — not just the win rate.

Break-even win rate

The break-even win rate is the minimum percentage of trades that must be winners for your strategy to be profitable given its RR ratio:

Break-even Win Rate = 1 / (1 + RR Ratio)

For a 1:2 setup: 1 / (1 + 2) = 33.3% — you only need to win 1 in 3 trades to be profitable.