Position Size Calculator: How to Calculate Forex Lot Size in Seconds
Calculate the exact lot size for your next trade based on account size, risk, and stop distance.
Risk Reward Calculator: How to Size Trades for a Positive Expectancy
A 65% win rate sounds great until you realize a 0.5:1 reward-to-risk strategy still bleeds money. This guide shows you exactly how the Risk Reward Calculator computes your ratio and the win rate you need just to break even.
Most retail traders chase win rate. Professionals chase expectancy — the average dollars made per trade after accounting for both winners and losers. The Risk Reward Calculator is the simplest expectancy tool ever built: enter three numbers and it tells you the ratio of reward to risk plus the minimum win rate needed for the setup to make money over a large sample of trades. Get into the habit of running every idea through it before you click the order button.
What the Risk-to-Reward Ratio Actually Means
Risk to reward, often written as R:R, compares how much you stand to lose if your stop is hit to how much you stand to make if your target is hit. A 1:3 ratio means you risk 1 dollar to make 3. The higher the reward side, the less often you need to be right for the strategy to be net profitable. This is why professional traders happily take setups with a 40% win rate — the math works in their favor.
The Three Inputs in the Calculator
Entry is the price you plan to open the trade at. Stop Loss is the price where the trade idea is invalidated and you exit for a loss. Target is the price where you plan to take profit. The calculator measures the absolute distance from entry to stop and from entry to target, then divides target distance by stop distance to produce the reward-to-risk ratio.
The Break-Even Win Rate Formula
Break-even win rate equals 1 divided by (1 plus the reward-to-risk ratio). A 1:1 setup needs to win 50% of the time. A 1:2 setup needs to win 33%. A 1:3 setup needs to win just 25%. This is the single most useful number a discretionary trader can know — anything above the break-even win rate is profit, anything below is a slow account drain.
A Worked Example
You are long EURUSD with an entry at 1.0850, a stop at 1.0820 (30 pips of risk) and a target at 1.0940 (90 pips of reward). The reward-to-risk ratio is 90 divided by 30, which equals 3.0. Break-even win rate equals 1 divided by 4, which equals 25%. As long as more than one in four of your trades hits target before stop, the strategy is profitable.
How to Use the Result to Filter Trades
- Reject any setup with a reward-to-risk below 1.5 unless you have a documented 70%+ win rate on it
- Place the stop where the trade idea is invalidated, not where the loss feels comfortable
- Place the target at a logical resistance, support, or measured move — never a round number for its own sake
- Track your actual win rate over 50+ trades and compare it to the break-even rate of your average setup
- Combine the Risk Reward Calculator with the Position Size Calculator to lock in both edge and survival
Try the Risk / Reward Calculator
Get your reward-to-risk ratio and required win rate in one click. Free, instant, no signup.
