Risk to Reward Calculator

Calculate trade risk/reward ratio, potential profit vs loss in dollars, and required breakeven win rate to stay profitable.

How the Risk to Reward Calculator Works

Calculate R:R ratio by dividing target price distance (|take profit - entry|) by risk distance (|entry - stop loss|). Breakeven win rate equals 1 ÷ (1 + RR ratio). A 1:3 RR trade requires only a 25% win rate to break even.

Calculation Formula
R:R Ratio = Target Distance ÷ Stop Distance

Breakeven Win Rate = 1 ÷ (1 + R:R Ratio). At 1:2 R:R, you need 33.3% wins; at 1:3 R:R, 25.0%.

Frequently Asked Questions

What is a good risk-to-reward ratio for prop firm trading?

Most consistent funded traders target between 1:2 and 1:3. This allows them to stay profitable and withstand losing streaks without breaching strict drawdown limits.

How does high R:R protect against daily drawdown breaches?

Higher R:R allows smaller risk per trade (e.g. 0.5%), keeping you far from the 4-5% daily limit while still hitting 8-10% profit targets within sensible timeframes.

Related guides

Learn more about position sizing and risk management.

Position Sizing Guide

Learn how to calculate the right position size and manage your risk.