Trade design tool
Risk/Reward Calculator
Work out the risk-reward ratio and the win rate needed to break even from your entry, take profit and stop loss. Expectancy and risk of ruin are shown as well.
- No registration
- Free
- Calculated in your browser
Check the balance between your loss and profit distance
Result
Risk-reward ratio
1 :-
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Profit distance
-pips
Loss distance
-pips
Required Win Rate
-%
RR rating:
-
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Risk-reward ratio guide
With a partial close
RR ratio
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Weighted average profit
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Required Win Rate
-
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Expectancy simulation
Moving the win rate changes the expectancy at the risk-reward ratio calculated above. The unit R is a multiple of a single stop-loss amount.
Expectancy per trade
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Expectancy over 100 trades
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Break-even win rate
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Assessment
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Balsara's risk of ruin
Risk of ruin by win rate and risk-reward ratio
Calculated at 2% risk per trade, with ruin defined as capital falling to 50% or below
Under 1% Under 10% Under 40% Under 80% 80% or more The outlined column is the level closest to your current RR ratio
How to read this result
What the risk-reward ratio is
How many times the distance to your target is compared with the distance to your stop, taken as 1. At 1:2 you are aiming for twice the profit of the loss.
What the required win rate is
The win rate at which your result is exactly break-even. If your actual win rate is above it, your expectancy is positive.
Points to watch
Spread, swap and slippage are not included. Your real result will come out worse than shown.
Method and specification
Main inputs used
Direction / Entry price / Take profit / Stop loss / Partial target and the share closed
When to use it
Checking the profit-loss balance before entry / Knowing the win rate your method needs / Deciding whether to add a partial close
Notes
The currency pair is used only to decide the pip decimals (0.01 for yen pairs, 0.1 for gold, 0.0001 otherwise). No amounts are calculated.
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Frequently Asked Questions
What risk-reward ratio should I aim for?
1:2 or better is the usual guideline, because at 1:2 you finish in profit as soon as your win rate is above 33.3%. Raising the ratio, however, widens the distance to your target and lowers the win rate. Ratio and win rate have to be considered together; chasing only one of them will not improve your results.
What does the required win rate mean?
It is the win rate at which your result is exactly break-even. It is 1 / (1 + risk-reward ratio) x 100, giving 50.0% at 1:1, 33.3% at 1:2 and 25.0% at 1:3. If your actual win rate is above that figure, your expectancy is positive. Spread and commission are not included, so leave a few percent of margin in live trading.
How should I read Balsara's risk of ruin?
It is a guide to the probability of your capital halving if you keep trading at the same win rate and risk-reward ratio. It is calculated with 2% of capital risked per trade and ruin defined as capital falling to 50% or below. The important point is that the probability never reaches zero even with positive expectancy, and it falls as you lower the risk per trade.
Once your money management is settled, the next step is choosing an EA.
Browse free EAs and the rankings to compare the approach that suits you.