Strong setups have a reward that's a multiple of the risk. Enter your direction, entry, stop, target, and position size to see the ratio, dollar risk and reward, the minimum break-even win rate, and expectancy at your hit rate.
Risk/reward ratio compares how much you stand to lose against how much you stand to gain on a trade. The calculator measures the price distance from entry to stop (risk) and from entry to target (reward), converts both into pips, then expresses reward as a multiple of risk — for example, a 1:2 ratio means your target is twice as far from entry as your stop.
Break-even win rate is the minimum percentage of trades you'd need to win, at a given risk/reward ratio, just to avoid losing money over time. It's calculated as 1 ÷ (1 + reward-to-risk ratio) — the higher your ratio, the lower the win rate needed to stay profitable.
Expectancy combines both numbers into a single figure: (win rate × average reward) − (loss rate × average risk). A positive expectancy means the strategy makes money on average even if a majority of individual trades lose, which is why professional traders track expectancy rather than judging a strategy by any single trade.
Worked example: going long EUR/USD at 1.1000 with a stop at 1.0950 (50 pips, $500 risk on 1 lot) and a target at 1.1150 (150 pips, $1,500 reward) gives a 1:3 risk/reward ratio. The break-even win rate at that ratio is 1 ÷ (1 + 3) = 25% — so even winning just one trade in four covers your losses. At an assumed 50% win rate, expectancy is (0.5 × $1,500) − (0.5 × $500) = $500 per trade, or $50,000 across 100 similar trades.
Many traders target at least 1:2, meaning the potential reward is twice the risk taken. At that ratio you can be profitable even with a win rate below 50%, which gives more room for error than a 1:1 setup.
Measure the distance in pips (or price) from your entry to your stop loss (risk), and from your entry to your take profit (reward). Divide reward by risk to get the ratio — for example, a 50-pip stop and a 150-pip target gives a 1:3 ratio.
Expectancy is the average amount you can expect to win or lose per trade, given your win rate and risk/reward ratio. It's the single number that tells you whether a strategy is profitable over a large sample of trades, rather than judging it trade by trade.
It's the minimum win percentage needed for a strategy to avoid losing money at a given risk/reward ratio. At a 1:2 ratio the break-even win rate is roughly 33% — win more often than that and the strategy is profitable over time.
Yes. Profitability depends on expectancy, not win rate alone. A strategy that wins only 35% of the time can still be strongly profitable if its average winner is several times larger than its average loser.