Risk Reward Ratio Calculator
Professional trading utility for Forex, Crypto, and Stocks. Features account-based position sizing, multi-target analysis, break-even probability modeling, and interactive PnL visualization.
About
In professional trading, the Risk/Reward Ratio (RRR) is the mathematical foundation of long-term profitability. It measures the potential profit of a trade relative to its potential loss. A ratio of 1:3 implies that for every $1 risked, the trader aims to gain $3. This asymmetry allows traders to be profitable even with a win rate below 50%.
Most amateur traders focus solely on entry signals, neglecting Position Sizing. This tool integrates Account-Based Risk Management directly into the calculation. By defining a fixed risk percentage (e.g., 1% or 2% of total equity), the calculator determines the exact unit size required based on the distance between the Entry and Stop Loss prices. This prevents catastrophic drawdowns and ensures mathematical consistency across volatile assets like Crypto or Forex.
Formulas
The core logic relies on determining the price distance for both risk and reward, then normalizing this against the account size.
The Risk/Reward Ratio (R) is calculated as:
R = RewardRisk
To calculate the required Position Size (S) based on account equity (E) and risk percentage (r):
S = E × rRisk
The Break-Even Win Rate (Wmin) required to avoid loss over time is:
Wmin = 11 + R
Reference Data
| Risk/Reward Ratio | Break-Even Win Rate | Profit Factor (100 Trades) | Strategy Type |
|---|---|---|---|
| 1:0.5 | 66.7% | Negative skew (Scalping) | High Frequency |
| 1:1 | 50.0% | Neutral | Intraday / Swing |
| 1:1.5 | 40.0% | Moderate Edge | Trend Following |
| 1:2 | 33.3% | Robust | Trend Following |
| 1:3 | 25.0% | High Performance | Breakout Trading |
| 1:5 | 16.7% | Aggressive | Long-term Swing |
| 1:10 | 9.1% | Black Swan Capture | Position Trading |