Risk Reward Calculator

What this calculator covers

It covers 30 instruments — 28 currency pairs plus gold (XAUUSD) and silver (XAGUSD) — on either side of the market. Each instrument carries its own quoting convention and contract size, and the tool reads both off the instrument you pick rather than assuming one.

Prices are entered to four decimals on pairs such as EURUSD, to two decimals on JPY-quoted pairs such as USDJPY, and to two decimals on both metals. That matches the convention used everywhere else on this site. The tool tells you which one it is using as soon as you pick an instrument, so you can check it against your broker's quote before you trust the number.

It runs one trade at a time, in your browser, with no login and no signup. Nothing you type leaves the page. There is no market feed: every price on this page came from you, and the tool will not show a price it did not get from you.

How the risk to reward ratio is calculated

Two distances, both measured from the entry, and nothing else:

1. Risk — the distance from the entry price to the stop loss price.
2. Reward — the distance from the entry price to the take profit price.

Divide reward by risk and you have the ratio. On a long: risk = entry − stop, reward = target − entry. On a short the two swap, because the stop sits above the entry and the target below it. The tool takes the absolute distance, so the ratio stays positive on both sides and the side only decides which levels make sense.

Worked example, the one loaded when the page opens: EURUSD long, entry 1.0850, stop 1.0800, target 1.0950. Risk is 0.0050, or 50 pips. Reward is 0.0100, or 100 pips. 100 ÷ 50 = 2, so the setup is 1:2 — one unit risked for two units of reward.

The money figures use the same distances: distance × units, where units is your lot size multiplied by the contract size for the instrument. One standard lot of EURUSD is 100,000 units, so 0.0050 × 100,000 = 500 and 0.0100 × 100,000 = 1,000. Both are stated in the quote currency of the pair, which is USD here. No currency conversion is done on this page, because a conversion needs a rate and this site has no rate to give you.

How the breakeven win rate is calculated

The breakeven win rate answers one question: what share of my trades has to win before this ratio stops losing money? It comes out of setting the expected value to zero.

Winning trade: +R, where R is the reward per unit of risk. Losing trade: −1, the stop. With a win rate of p, the average trade is p × R − (1 − p) × 1. Set that to zero:

p × R − (1 − p) = 0  →  p × R + p = 1  →  p = 1 ÷ (1 + R)

At 1:2, R is 2, so p = 1 ÷ 3 = 33.3%: win a third of your trades and the winners pay for the losers. At 1:1, R is 1 and p = 50%. At 1:5, R is 5 and p = 16.7%. The number is arithmetic, not a forecast — it says nothing about how often you will actually win, only what you have to beat.

It also assumes every winner hits the full target and every loser takes the full stop. Trades closed early, moved stops and partial exits all shift it.

What a good risk to reward ratio depends on

The questions people actually ask are what is a good risk reward ratio for scalping, for day trading and for swing trading, and the honest answer is the same in all three: the ratio does not decide anything on its own. It only sets the win rate you have to beat. What changes between the three is not the ratio but how much of your risk the trading costs take, and those costs are charged in absolute pips while your risk is measured in pips as well.

Add one term to the formula above. Call c your round-trip cost as a share of what you risk — spread, commission and financing on the way in and on the way out, divided by the distance to your stop. A winner then nets R − c, a loser costs 1 + c, and setting the average trade to zero gives:

p = (1 + c) ÷ (1 + R)

With no cost at all, c is 0 and this falls back to the formula already on the page. Every bit of cost moves the win rate you need upward, and it moves it by more when the stop is close.

Read across a row and you see the trade-off: the higher the ratio, the lower the win rate you need, and the further price has to travel to deliver it. A 1:5 needs 16.7% of your trades to win. Nothing here says that is easier than 1:2 — only that it is a different bet.

Two setups can both be 1:2 and put completely different money at risk. On EURUSD with a 20 pip stop, 0.01 lot risks 2.00 USD and one standard lot risks 200.00 USD. Same ratio, hundredfold difference in what a losing streak costs you, and that number is not on this page — the forex stop loss calculator is where the same three prices turn into a position size and a figure in dollars.

What is a good risk reward ratio for scalping?

The shortest stops pay the largest share of their risk in costs, because a spread is charged in pips no matter how close your stop sits. On a 5 pip stop, a 2 pip round-trip cost is 40.0% of what you risk, and the 1:2 setup that needs 33.3% with no costs needs 46.7%. That is the whole difficulty of scalping, and it is arithmetic rather than opinion: shortening the stop does not shrink the cost, it only shrinks the risk the cost is measured against.

What is a good risk reward ratio for day trading?

Somewhere between the two. At a 20 pip stop the same 2 pip cost is 10.0% of the risk, and the breakeven win rate at 1:2 moves from 33.3% to 36.7%. The ratio you can get is still set by the chart — by the distance at which the trade is wrong and the distance it can realistically travel.

What is a good risk reward ratio for swing trading?

Costs matter least here because the stop is far away: at an 80 pip stop the same 2 pip cost is 2.5% of the risk, and the breakeven at 1:2 is 34.2%, barely above the 33.3% you would need with no costs at all. The pressure moves somewhere else instead — a target 160 pips out is hit less often than one 10 pips out, so the win rate you need falls while the win rate you can actually reach falls with it. This page does not tell you which of the three to trade.

The 2 pip cost is there so the column has a number in it. Your own round-trip cost is whatever you are charged, and this page has no feed and no broker data to tell you what that is. Divide it by your stop distance and read the row nearest the answer. The money column is the tool above run on EURUSD at one standard lot, stated in the quote currency.

What is a good risk reward ratio in crypto?

The same two distances, measured in dollars of price movement rather than in pips, because there is no pip convention to fall back on. The BTCUSD pip calculator runs the ratio on crypto and returns it as a multiple of what you risked. The cost arithmetic is unchanged: what you pay to get in and out, divided by the distance to your stop.

What is a good risk reward ratio for options?

Not on this page. A long option risks the premium paid, and there is no stop price to measure a distance to, so one of the two numbers the ratio divides does not exist. The money version — contracts, shares and premium as the unit — is on the lot size calculator, in its section on futures, stocks and options.

What this page does not assume about a good ratio

• It does not assume your costs. No spread, commission or financing figure appears in any number on this page — the cost column is yours to fill in.
• It does not assume one ratio beats another. A higher ratio lowers the win rate you need and raises the distance price has to cover; which of those hurts you more depends on how you trade.
• It does not assume the numbers survive the trade. The ratio is a snapshot taken when you place the order. Moving the stop, taking partial profit or closing early all change the R you actually got.
• It does not assume the ratio carries over to options, futures or index CFDs, where the risk can be a premium or a contract multiplier rather than a distance between two prices.
• It does not assume your win rate. The breakeven figure is a floor you have to clear, not an estimate of what you will hit.

What the Kelly criterion says about size, and what it needs from you

Everything above treats the win rate and the ratio as a trade-off: one goes up, the other has to come down. The Kelly criterion stops treating them as a trade-off and asks a different question. Given both of them, what fraction of the account belongs on a single trade? It has a closed-form answer built from the same two fields this page already works with:

f = (p * b - q) / b   where p is the win rate, q is 1 - p, and b is what a winner pays per unit risked.

The tool above runs it. On the numbers loaded into it — a 45% win rate paying 2 units of reward per unit risked on a 10,000 balance — the answer is 17.50% of the account, or 1,750.00, and four straight losers at that size halve the balance. Nothing in that sentence is a recommendation. It is what the formula returns for those two inputs, and the section below is about how much of it survives contact with a real trade.

Read down a column and the fraction climbs steeply: five points of win rate at 1:2 moves the answer from 10.00% to 17.50% to 25.00%. Read across a row and the ratio does the same. "No edge" is not a missing value — at 1:1 a win rate of 50% or less pays nothing, and the formula returns a size of zero rather than a small one, because no fraction of an account grows on a flat or negative expectancy.

What is the Kelly criterion in forex?

The same formula, with nothing in it that belongs to forex. It takes a win rate and a reward per unit risked and returns a fraction of the account. It does not know what a pip is, it does not know what a lot is, and it does not know which pair you are trading — all three of those sit downstream of the number it gives you.

That is the first thing worth being blunt about: a Kelly number is a fraction, not a position. It says risk 17.50% of the account. It does not say how many lots, because turning a fraction into a size needs the distance to your stop, and that distance is not one of the formula's inputs — it is a third number Kelly never asks for. The forex stop loss calculator is where the fraction becomes a size: entry, stop and risk percentage in, lot size out.

How do I use the Kelly criterion for position sizing?

In three steps, and the third one is where most people stop:

1. Get the fraction — win rate and reward per unit risked, both from closed trades, into the formula above.
2. Turn it into money — the fraction times the balance. On the loaded example, 17.50% of 10,000 is 1,750.00.
3. Turn the money into a size — divide by the distance to your stop, in money per unit. Skip this and you have a percentage that cannot be typed into an order ticket.

And then a fourth step the formula does not know about: check that the size exists. Your answer will be a continuous number and your platform only accepts discrete ones, so what you can actually place is the largest step that does not exceed it. The MT4 and MT5 lot size calculator is where that rounding happens, and it matters in the direction that hurts: rounding up takes you past the number you were given.

Is the full Kelly number the size to trade?

Almost nobody trades it, and the arithmetic says why. The Kelly point is the top of a curve, not a plateau: it is the size that maximises compounding if both inputs are exactly right, and being wrong about either one is not a small error, because the curve falls off on both sides and falls off faster on the high side.

Suppose the true win rate is 45% at 2 units of reward, so the true Kelly number is 17.50% and the best available growth is 2.92% per trade. Size off a believed win rate instead and this is what happens:

Half of the number still returns 2.22% against 2.92%, roughly three quarters of the growth, and it does it with half the swing — the size of one trade's move is proportional to the fraction, so its variance goes down with the square of it. Overshooting is not symmetric: believing 50% instead of 45% puts you at 25.00% and leaves 2.42%; believing 55% puts you at 32.50% and leaves 0.92%. Push far enough past the peak and the growth turns negative at a win rate that is still profitable — that is what the last row is.

What does the Kelly criterion assume that a forex trade does not give it?

Five things, and each one pushes the real answer below the one printed above:

• Every loser costs exactly one unit and every winner pays exactly b. Real trades get closed early, take partial profit and get stopped out past the stop on a gap. None of those are one unit or b units.
• You can size continuously. You cannot. Lot steps are discrete, and the smallest step your broker accepts can be bigger than the number you were given.
• The two inputs are known. They are estimated, off a sample, and the formula has no idea how big the sample was. A 45% win rate from forty trades and one from four hundred trades produce the same fraction here.
• Nothing is taken off the top. No spread, no commission, no overnight financing. Costs come out of the same edge the fraction is built on:

That is the same effect the table further up shows on the breakeven win rate, arriving at the size instead: a cost that is 20% of what you risk takes the fraction from 17.50% to 6.94%, and a scalper with a two-pip stop pays a far larger share of their risk in costs than a swing trader with an eighty-pip one. The forex profit calculator puts the costs back in on a single trade and shows how far price has to travel before the trade earns anything at all.

• The account is the whole story. The formula sizes one bet at a time. Two positions that lose together are one position twice the size, and Kelly has no field for that.

What this page does not assume about the Kelly number

• It does not assume your win rate or your reward per unit risked. Both are fields, and the fraction is only as good as what you type.
• It does not assume any cost. Spread, commission, financing and slippage all lower the true fraction; none of them appears in the figure above.
• It does not assume your stop distance, so it never turns the fraction into a lot size. That third number belongs to the forex stop loss calculator.
• It does not assume the size you want is available. Lot steps, minimum sizes and margin are platform rules this page cannot see.
• It does not pick a fraction for you. Full, half and quarter are all on the tool, and the table above shows what each one costs and buys. Which of them you trade is not a calculation.

What this page leaves out on purpose

Spread, commission, swap and slippage are not in any number on this page. They are real costs and they all push the breakeven win rate up, which is the direction that matters: the figure shown here is the best case, and your true floor is higher by however much the trade costs you.

Account balance and risk percentage are not asked for, so nothing here tells you what fraction of your account a trade puts at risk. That is a different calculation and it lives on a different page — see the link at the bottom. The forex stop loss calculator is where it lives: the same entry and stop prices, turned into a position size and a number of dollars.

Index CFDs and crypto pairs are left out. Their contract size and point value differ from broker to broker, so any figure printed would be a guess. For those, read your broker's contract specification.

The BTCUSD pip calculator runs the same ratio on crypto, where the stop is measured in dollars of price movement rather than in pips and the result comes back as a multiple of what you risked.

Price precision, and why it changes with the instrument

The number of decimals is part of the instrument, not a formatting choice. Four-decimal pairs quote to 0.0001, so a pip is the fourth decimal. JPY-quoted pairs quote to 0.01, so a pip is the second decimal — the yen is worth roughly a hundredth of a dollar or a euro, and a four-decimal pip on those pairs would be a price move far smaller than anything the market trades in. Metals quote to two decimals as well.

That is why the entry, stop and target fields change their step and their placeholder when you change the instrument: typing 157.95 into a field expecting 1.0850 gives you a wrong ratio, and the tool would rather narrow the field than quietly misread it.

Frequently asked questions

Is this the same thing as a risk reward ratio calculator?

Yes. Risk reward calculator, risk reward ratio calculator, risk to reward ratio calculator and reward risk ratio formula all describe the same job: comparing what you stand to lose against what you stand to gain. This page does the lot — ratio, breakeven win rate, distance in pips and the money — in one place.

What is the reward risk ratio formula?

Reward to risk = (target − entry) ÷ (entry − stop) on a long, and (entry − target) ÷ (stop − entry) on a short. Both are the same statement: reward distance over risk distance. The two conventions you will see written down are 1:2, risk first, and 2:1, reward first. They are the same trade with the numbers the other way round, so check which one a signal or a broker means before comparing figures.

How do I use it for a short?

Switch the side to Short and put the stop above the entry and the target below it. The tool checks the ordering and tells you if the levels are on the wrong side rather than returning a number built from them.

What is a good risk to reward ratio?

There is no single answer, and the table above is the honest way to see why: 1:1 needs a 50% win rate, 1:2 needs 33.3%, 1:3 needs 25%. A higher ratio buys you a lower win rate, but a target twice as far away is hit less often, so the two move against each other. The ratio is worth setting from where the trade is actually invalid and where the chart says it can go — not from a number you want to see. The section above breaks the same answer out by timeframe — scalping, day trading and swing trading — because what each of them pays in costs changes the win rate each one needs.

Why does my stop have to be below the entry on a long?

Because that is the only way the risk distance means anything. A stop above the entry on a long is not a stop, it is a level that turns the trade into a different trade. The tool flags it instead of computing a ratio from it.

Does the ratio change if I trade a bigger position?

No. The ratio is a comparison of two distances, so it is the same on 0.01 lots and on 10. What changes with size is the money: risk and reward both scale with the number of units, which is why the money figures move and the ratio does not.

Does it account for spread and commission?

No, and no number on this page pretends to. Costs raise the win rate you actually need above the one shown here. The forex profit calculator is where they go back in: it takes the spread, the commission and the overnight financing off a single trade and shows how far price has to travel before the trade earns anything.

What is the relationship between win rate and risk reward?

They are two sides of the same equation. A higher risk reward ratio lowers the win rate you need, but a target further away is hit less often, so the two move against each other. The forex stop loss calculator is where the position side of that equation lives: it tells you how many pips your stop is and what lot size that buys inside your risk budget. The breakeven win rate is the floor — anything above it makes money at this ratio, anything below it loses money.

How do I calculate the risk reward ratio in Excel?

One line. Put the entry in A1, the stop in A2 and the target in A3, then =ABS(A3-A1)/ABS(A1-A2) gives the reward per unit of risk, and =1/(1+that cell) gives the breakeven win rate. Both are the same formulas this page runs. What a spreadsheet will not tell you is the money, because that needs the contract size of the instrument — the tool above carries it, and the pip calculator shows where the per-pip figure comes from.

How do I use the risk to reward ratio in trading?

Levels first, ratio second. Put the stop where the trade is wrong and the target where the chart says it can go, then read the ratio those two levels produced. If you find yourself picking the ratio first and placing the target to match, the distance has stopped coming from the chart and started coming from a number you wanted to see — and the breakeven win rate you calculate afterwards describes a trade you are not actually taking.

Is there a Kelly criterion calculator on this page?

Yes, the second tool on this page. Give it a win rate and a reward per unit risked and it returns the fraction of the account the formula puts on one trade, at full Kelly, half or a quarter, plus the money on your balance, the number of straight losers that halves the account, and the expected log growth per trade. What it will not do is turn that fraction into a lot size — that needs your stop distance, which is on the forex stop loss calculator.

Why does the Kelly number come out so large?

Because the formula is answering a question nobody actually has. It maximises the growth rate of an account over an infinite sequence of identical bets with known probabilities. Your account is not that, and the two inputs are estimates rather than probabilities. On the example loaded into the tool — a 45% win rate paying 2 — it says 17.50%, which is 1,750.00 on a 10,000 balance and four straight losers from halving it. That is not a reckless answer to a sensible question; it is the correct answer to a question with no sample error, no costs and no stop distance in it.

What fraction of Kelly should I trade?

This page does not pick one for you, and the arithmetic is why: at the example numbers, full Kelly returns 2.92% growth per trade and halves the account in four straight losers, half of it returns 2.22% and takes eight, a quarter returns 1.31% and takes sixteen. You are buying drawdown depth with growth, at a rate the table above shows in both directions. Anyone who tells you there is a correct fraction is quoting a preference, not a formula.

How is the Kelly criterion different from the breakeven win rate?

The breakeven win rate is a floor: the share of trades you have to win before the ratio stops losing money. The Kelly fraction is a size: given a win rate above that floor and the reward per unit risked, how much goes on each trade. One tells you whether the trade is worth taking, the other tells you how much to put on it, and the second is far more sensitive to being wrong — five points of win rate moves the fraction from 10.00% to 17.50% to 25.00% at 1:2, while the breakeven rate does not move at all.

Related tools on this site

The lot size calculator takes the account side of this: give it your account balance, a risk percentage and the stop distance in pips, and it returns the lot size that keeps the loss inside the limit you set.

The pip calculator answers the other half — what one pip is worth on the pair you are trading, in your account currency, before and after conversion.