Risk Reward Calculator
A risk reward calculator compares how far your stop loss is from the entry with how far your take profit is. A 25-pip stop with a 50-pip target is a 1:2 risk reward ratio, which needs a win rate above 33.3% just to break even before costs.
How do you calculate the risk reward ratio?
Risk reward ratio = stop distance : target distance, written as 1 : (target ÷ stop). For a buy, the stop distance is entry − stop loss and the target distance is take profit − entry. For a sell, both are the other way round. Dividing each distance by the pip size gives it in pips.
The break-even win rate tells you what the ratio needs: break-even win rate = risk ÷ (risk + reward). At 1:1 that is 50%; at 1:2 it is 33.3%; at 1:3 it is 25%.
The spread makes the real ratio worse than the planned one. It is added to the loss and taken off the gain, so the calculator uses (target − spread) ÷ (stop + spread) when you enter one.
What is a worked example of risk reward?
Buying EURUSD at 1.08500 with a stop at 1.08250 and a target at 1.09000 risks 25 pips to make 50, a ratio of 1:2. The pip size is 0.0001, so each distance in price divided by 0.0001 gives it in pips, and the break-even win rate is 33.3%.
| Part | Distance | In pips |
|---|---|---|
| Risk (entry − stop) | 1.08500 − 1.08250 = 0.00250 | 25 |
| Reward (target − entry) | 1.09000 − 1.08500 = 0.00500 | 50 |
50 ÷ 25 = 2, so the ratio is 1:2, and the break-even win rate is 25 ÷ (25 + 50) = 33.3%. With a 1.5-pip spread the real ratio is (50 − 1.5) ÷ (25 + 1.5) = 1:1.83, and the break-even win rate rises to 35.3%.
Why the ratio matters, and how it works with win rate, is explained in the lesson Risk Reward Ratio: How to Calculate It. To turn the stop distance into a lot size, use the position size calculator.
What does each input mean?
The calculator needs the direction of the trade, your entry, stop loss and take profit prices, and the instrument's pip size. An optional spread in pips shows how much the cost of entry lowers the ratio. The trading cost calculator shows that cost in money.
- Instrument: fills in an example pip size for common symbols. Choose Other to enter your own.
- Pip size: the price change that counts as one pip, for example 0.0001 for EURUSD and 0.01 for USDJPY.
- Direction: buy (long) if you profit when the price rises, sell (short) if you profit when it falls.
- Entry, stop loss and take profit prices: the levels of your plan, from your platform.
- Spread (pips): optional. The gap between the buy and sell price at the time you plan the trade.
What are the assumptions and limits?
The ratio compares the distances to your stop and your target, so it describes the plan rather than the chance of reaching either level. It ignores commission and swap, and a stop can fill past its level in a fast market. Pair it with your win rate to judge a set of trades.
- The ratio describes the plan. It says nothing about how likely the price is to reach either level.
- Prices can jump past a stop loss, for example after news or over a weekend, so a loss can be larger than the planned distance.
- The break-even win rate covers the spread only if you enter it. Commission and swap make it higher. Work them out with the trading cost calculator.
- Pip sizes for metals, indices and stock CFDs vary between platforms. Check the symbol's specification in MetaTrader 5. Nothing you enter is stored.
Frequently asked questions
What is a good risk reward ratio?
There is no single good ratio. A higher ratio needs a lower win rate to break even, but a more distant target is usually reached less often. What matters is whether the ratio and the win rate together cover the losses and the costs.
What win rate do I need at 1:2?
More than 33.3% of trades must reach the target just to break even before costs, because one win of 2 covers two losses of 1. Spread, commission and swap push the figure higher.
Is risk reward written 1:2 or 2:1?
This calculator writes risk first, so 1:2 means you risk 1 to aim for 2. Some traders write reward first, as 2:1, for the same trade. Check which way a source writes it before comparing figures.
Does the spread change the ratio?
Yes. You buy at the higher ask price and the position is closed at the lower bid price, so the spread is added to every loss and taken off every win. On a tight stop and target, a small spread can change the ratio a lot.
Can I calculate it in money instead of pips?
Yes. Multiply each pip distance by the pip value of your position. The ratio is the same in pips and in money, because both distances are multiplied by the same pip value.
Sources
- MetaQuotes, MetaTrader 5 Help: Basic Principles (accessed 20 October 2026): buying is executed at the Ask and selling at the Bid, and stop loss and take profit are checked against the Bid for long positions and the Ask for short positions. https://www.metatrader5.com/en/terminal/help/trading/general_concept
- MetaQuotes, MetaTrader 5 Help: Market Watch (accessed 20 October 2026): the symbol specification shows the spread in points, the digits and the tick size of each symbol. https://www.metatrader5.com/en/terminal/help/trading/market_watch
- U.S. Securities and Exchange Commission, Investor.gov, Stop Order (accessed 20 October 2026): a stop order becomes a market order when the stop price is reached, and the execution price may differ from the stop price in a fast-moving market. https://www.investor.gov/introduction-investing/investing-basics/glossary/stop-order
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