What is a good risk to reward ratio?

There isn't one on its own. 1:2 needs you to win 33.3% of the time to break even, 1:1 needs 50%. A good ratio is one where your real win rate on that setup is comfortably above the breakeven win rate.

What does 1:2 risk reward mean?

You risk 1 to make 2. If your stop is 10 points away, your target is 20 points away. You break even if you win a third of these trades.

What win rate do I need at 1:3?

25%, before fees. The formula is 1 ÷ (1 + reward to risk), so 1 ÷ 4.

Is risk to reward the same as reward to risk?

Same numbers, flipped. 1:3 risk to reward is 3R, or a reward to risk of 3. People write it both ways, which is why the calculator shows both.

Should I use risk reward in points or dollars?

Either. The ratio is the same, because points turn into dollars at the same rate for the stop and the target. Add your dollar risk to see what the target pays.

Free tool

Risk reward calculator

Put in your entry, stop and target. You get the risk to reward ratio, the win rate you need to break even on trades like it, and what the target pays for the money you're risking. Works for futures, forex, stocks and crypto.

EntryStop lossTarget

Money at risk if the stop is hit ($, optional)

Works for any market: futures points, forex prices, stock prices or crypto. Long or short is worked out from where your stop is. Add what you'd lose at the stop to see what the target pays.

Risk to reward

1 : 2.50

Long, risking 20 to make 50

Reward to risk: 2.50R
Win rate to break even: 28.6%
Loss at the stop: -$200.00
Profit at the target: $500.00

You need to win 28.6% of trades like this to break even, before fees. Anything above that is edge, if you actually hold to the target and don't move the stop.

Did you actually hold to the target?

Planned 1:3 and took profit at 1:1? Import your platform's export and Actal grades every trade on whether you followed the plan, and prices the times you didn't.

Journal for free →

How to calculate risk to reward

risk = |entry − stop|
reward = |target − entry|
reward to risk = reward ÷ risk
breakeven win rate = 1 ÷ (1 + reward to risk)

Example: long 5 MNQ at 21,500 with a stop at 21,480 and a target at 21,550. That's 20 points of risk for 50 points of reward, so 1:2.5. You need to win about 29% of these to break even. At $2 a point for 5 contracts, the stop costs $200 and the target pays $500.

Risk reward and the win rate you need

The further your target is compared to your stop, the less often you need to be right.

Risk : reward	Win rate to break even
1 : 0.5	66.7%
1 : 1	50.0%
1 : 1.5	40.0%
1 : 2	33.3%
1 : 3	25.0%
1 : 4	20.0%
1 : 5	16.7%

Before fees. Fees and slippage push every number in the right column up a little.

The ratio on paper isn't the ratio you get

This is one of the most common things I see when I go through a student's journal. They plan 1:3 trades, then take profit early because it feels good and move the stop because the trade "needs room". Say the average winner ends up at 1R and the average loser at 1.3R. On paper it's a 1:3 strategy. In the account it needs a win rate over 56% just to break even.

So don't chase a bigger ratio. Pick a target your setup actually reaches often enough, then hold to it and never widen the stop. That's the part a journal is for: checking whether you did what you planned, trade after trade.

Next, turn the stop into a size with the position size calculator, or check whether your real results have an edge with the win rate calculator. Forex traders can get pip values from the pip calculator.

Questions people ask

Risk is the distance from your entry to your stop. Reward is the distance from your entry to your target. Divide reward by risk. Entry 100, stop 98, target 106 is 2 risk and 6 reward, so 1:3.

Plan 1:3, take 1:1? Find out.

Import your trades and Actal grades every one on whether you followed your plan, and puts a dollar cost on every rule you broke. Free during beta, no card.

Journal for free Position size calculator

Made by Joakim Jusell, futures trader and coach at Jusell Trading Academy.