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DisciplineTrade

Risk reward calculator

The risk-reward ratio compares how much a trade can make to how much it can lose: distance to target divided by distance to stop. Entry 300, stop 280 and target 342 give 42 ÷ 20 = 2.1R. At 2.1R you break even if you win about 32% of the time, before charges.

Risk reward calculator

Reward : risk
2.1
Breakeven win rate
32.26%
Risk per unit
20
Reward per unit
42

How it is calculated

  • Risk = |entry − stop|
  • Reward = |target − entry|
  • R:R = reward ÷ risk
  • Breakeven win rate = 1 ÷ (1 + R:R)

Worked example

Risk 20 and reward 42 give 2.1R. Breakeven win rate = 1 ÷ 3.1 = 32.3%. Win more often than that (after costs) and the setup has a positive expectancy.

Educational maths only. Not investment advice.

Questions

Is a higher R:R always better?

Not by itself. Far targets are hit less often. What matters is win rate and R:R together, which is what the expectancy calculator combines.

Do charges change the breakeven?

Yes. Costs raise the win rate you need. Use the breakeven win rate calculator with a cost per trade.

Track these numbers automatically

DisciplineTrade records risk, R-multiples and charges for every trade, and scores your discipline. Free.

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