Risk-reward ratio calculator
Before entering, compare what the trade can lose with what it can make. The ratio also tells you how often such trades must work just to break even.
How to use it
- Choose buy or sell.
- Enter the entry, the stop loss and the take-profit prices.
- Optionally add the money at risk to see the profit in USD if the target is reached.
Worked example
Buy at 100, stop at 95, target at 115: risk 5, reward 15, ratio 1 : 3. Such trades break even winning only 25 % of the time (1 ÷ (1 + 3)).
The formula
R:R = (target − entry) ÷ (entry − stop) for a buy; break-even win rate = 1 ÷ (1 + R:R)
Questions
What is a good risk reward ratio?
There is no single answer: 1:2 or better is common, but a lower ratio can work with a high win rate. Compare the break-even win rate with your real results.
How do I use risk reward with the COT report?
Positioning helps with direction; the ratio checks whether the trade is worth taking at this price.
Does the ratio include spreads and fees?
No. Spreads, commissions and slippage make the real ratio slightly worse.
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