The risk-reward ratio is one of the simplest, most useful checks in trading: it weighs the distance to your stop loss against the distance to your target. This free calculator turns your entry, stop, and take-profit prices into a ratio — and the win rate you'd need just to break even.
Risk-reward calculator
Risk : reward
How it works
risk-reward = (target − entry) ÷ (entry − stop)
Risk is the distance from your entry to your stop loss; reward is the distance from your entry to your take profit. The ratio is reward ÷ risk. The break-even win rate is 1 ÷ (1 + ratio) — so a 1:2 trade only needs to win about a third of the time to break even before costs. Size each trade with the lot size calculator.
Risk-reward describes one trade's shape, not its outcome — you still need a win rate that beats the break-even level, and spreads, commissions and slippage eat into the maths. It's a planning tool, not financial advice, and most retail traders lose money. Practise on a demo first.
Test your plan on a free demo
Open a free MT4 demo and trade your planned risk-reward setups with virtual money before risking real funds.
⚠ Trading forex and CFDs is high-risk and most retail traders lose money. This is not financial advice.
Affiliate disclosure: we may earn a commission if you open a broker account through our links, at no extra cost to you. Learn more.
Related tools & guides
Pair it with the lot size and profit calculators, and see how to set a stop loss & take profit in MT4.
Frequently asked questions
What is a risk-reward ratio?
The risk-reward ratio compares how much you stand to lose if your stop loss is hit (the risk) with how much you stand to gain at your target (the reward). A 1:2 ratio means you're risking one unit to make two. It's a core way to judge whether a trade is worth taking.
How do I calculate risk-reward?
Risk = the distance from your entry to your stop loss; reward = the distance from your entry to your take profit. The ratio is reward ÷ risk. For example, a 50-pip stop and a 100-pip target give a 1:2 risk-reward ratio.
What is a good risk-reward ratio?
Many traders look for at least 1:2, but there's no magic number — a lower ratio can work with a high win rate, and a high ratio can lose money with a low one. What matters is that your ratio and your win rate together produce a positive expectancy over time.
What win rate do I need to break even?
Break-even win rate ≈ 1 ÷ (1 + risk-reward). At 1:1 you need about 50%, at 1:2 about 33%, at 1:3 about 25%. Anything above the break-even rate is profitable before costs; the calculator shows it for your inputs.
Trading foreign exchange and contracts for difference (CFDs) carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. You could lose some or all of your deposited funds; do not trade with money you cannot afford to lose. Past performance is not indicative of future results. Nothing on MT4Download.com is financial, investment, or trading advice. Consider your circumstances and seek independent advice if needed.