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.
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.