Risk-reward calculator
Get the R:R of a trade from its entry, stop and target, the win rate it needs to break even, and the expectancy of a strategy.
What the risk-reward ratio means
The risk-reward ratio (R:R) compares what a trade can make with what it can lose. Risk is the distance from entry to stop, reward the distance from entry to target. A long from 1.1000 with a stop at 1.0980 and a target at 1.1050 risks 20 pips to make 50: R:R is 2.5. Expressed in R — multiples of the risk — the trade either loses 1R or makes 2.5R.
The break-even win rate
R:R on its own says nothing about profit. What matters is whether you win often enough for that ratio. With every win paying RR and every loss costing 1R, the win rate at which you break even is:
break-even win rate = 1 ÷ (1 + RR)
- R:R 1 — you need to win 50% of trades.
- R:R 1.5 — 40%.
- R:R 2 — 33.3%.
- R:R 3 — 25%.
A higher R:R needs a lower win rate, but targets further away are hit less often. The trade-off is worked through in win rate vs risk-reward.
Expectancy: what a trade is worth on average
Expectancy combines the two: expectancy = win rate × RR − (1 − win rate) × 1, in R per trade. A 40% win rate at 2R gives 0.4 × 2 − 0.6 = +0.2R per trade: over 100 trades at $100 risk, about $2,000 before costs. A 30% win rate at the same R:R gives −0.1R — a slow loss however good individual trades look. The calculator also turns expectancy into money for the risk you enter.
Using the calculator
Enter the entry, stop and target of one trade to get its R:R and the win rate it needs to break even. Below that, enter your win rate and average R:R from your history, and the risk per trade, to get the expectancy per trade in R and in money.
Where the numbers come from
The win rate and average R you put in should come from your own trades, not from a backtest you have not traded. A journal that records the stop of every trade gives you both: the LSG Club journal calculates the realised R of each trade from its stop, and its optimal RR report replays your trades on real candles to show which target would have paid the most. Costs matter too: spread and commission reduce every win and enlarge every loss, which lowers expectancy, especially on tight stops. And trust a sample of a few dozen trades before the result: with 20 trades a measured 40% win rate can easily be 25% or 55% in reality.
Frequently asked questions
What is a good risk-reward ratio?
There is no universal number. A ratio is good when your real win rate is above its break-even win rate with a margin for costs. Many ICT traders aim for 2R or more and accept a lower win rate.
How do partial closes and break-even moves affect R:R?
They change the average win and loss. Use the average R of your winning trades as the RR and count break-even trades separately to get an honest expectancy.
Is expectancy the same as profit factor?
No. Expectancy is the average result per trade in R or money; profit factor is gross profit divided by gross loss. Both are positive only when the strategy makes money.