What risk-reward ratio makes a trade worth taking?

There is no universal floor — 1:1 is profitable at a 60 % hit rate, 3:1 is not at 20 %. What matters is whether your own measured win rate clears the setup's break-even threshold. Without solid statistics over at least 50 to 100 comparable trades, build in a margin of safety and plan with a rate five to ten points below the one you hope for.

Can I improve the ratio by tightening the stop?

Arithmetically yes, in practice rarely. A tighter stop raises the ratio but lowers the win rate, because ordinary noise triggers it more often — the two effects work against each other. Trade count and therefore total cost also rise. It is usually better to anchor the target to a realistic structure and discard setups where the ratio does not work from the outset.

What is the difference between expectancy in money and expectancy in R?

Expectancy in money depends on position size and is not comparable between trades of different sizes. Expressed in R — multiples of the amount risked — it becomes size-independent. A value of 0.25 R per trade means a quarter of the risk earned on average, whether EUR 50 or EUR 5,000 was at stake. For comparing strategies, R is the more usable unit.

Does the calculator account for partial exits and trailing stops?

No. It models a trade that ends either at the stop or at the target. Partial exits change the outcome profile fundamentally: they raise the win rate but lower the average ratio, because the full gain now applies to only part of the position. If you trade that way, feed in the average realised ratio from your own journal rather than the planned one.

Calculators

Risk/reward calculator

What win rate your setup needs.

A setup is not good because it works often, nor bad because it fails often. What counts is win rate multiplied by risk-reward. This calculator joins the two: it shows what hit rate your target-to-stop ratio demands — and what each trade returns on average.

Inputs

Entry price

Stop-loss price

Target price

The price at which the position is closed in full.

Position size (units)

Shares, lots or contracts — the same unit the prices are quoted in.

Round-trip cost

Commission in and out, spread, conversion

Expected win rate (%)45 %

Ideally the figure from your own trading journal, not the hoped-for one.

Account currency

Risk-reward ratio

2.88 : 1

Gain at target (After costs): €1,188
Loss at stop (After costs): €412
Before costs: 3.00 : 1

Break-even win rate

25.8 %

Above this rate the expectancy turns positive

Expectancy per trade

€308.00

0.75 R — in R (multiples of risk)

Result over 100 trades

€30,800

74.8 R

Expectancy across win rates

The bold line is your setup after costs. The faint lines show 1:1, 2:1 and 3:1 for comparison. Where a line crosses zero is the win rate at which the setup starts making money.

Expectancy by win rate

Win rate	Per trade	in R	Over 100 trades
20 %	-€92	-0.22 R	-€9,200
30 %	€68	0.17 R	€6,800
40 %	€228	0.55 R	€22,800
50 %	€388	0.94 R	€38,800
60 %	€548	1.33 R	€54,800
70 %	€708	1.72 R	€70,800

Assumptions behind this calculation

A long position is assumed, closed either at the stop or at the target — no partial exits, no trailing stop.
Every trade uses the same position size and the same risk. Varying size changes expectancy independently of the win rate.
Costs are deducted once per round trip and added to the loss side; they are incurred on losing trades too.
Expectancy is an average over many trades. Across 20 or 30 trades randomness dominates — even a positive setup can spend a long time under water.
Tax, slippage and price gaps are excluded and make the real outcome worse.

Note: These calculators are for information only and are not investment advice. Content on Brokaro is for information purposes only and is not investment, legal or tax advice.

How this is calculated

The break-even win rate

At a 1:1 ratio more than half your trades must work for anything to be left over. At 2:1, 33.4 % is enough; at 3:1, 25 % suffices. The formula is short: required win rate = risk / (risk + reward). That is why a strategy losing seven trades in ten can be profitable — and one winning eight in ten can be ruinous if the two losses each cost five times as much.

Costs push the threshold up

Fees and spread hit twice: they shrink the win and enlarge the loss. A nominal 2:1 setup drops to roughly 1.7:1 once EUR 12 of costs land on a EUR 100 risk — and the required win rate climbs from 33 % to 37 %. The smaller the position, the heavier that effect; with flat commissions it becomes the dominant factor below roughly EUR 2,000 of order value.

Expectancy, not the single outcome

Expectancy is the average return per trade over many repetitions: win rate times gain minus the complement times loss. Positive does not mean the next trade wins — it means repetition pays. That is why trade count belongs in the calculation: over 20 attempts randomness dominates, over 200 the statistics do.

Why the curve is a straight line

Expectancy grows linearly with win rate — every additional percentage point adds the same amount. What matters is therefore not the shape but the zero crossing and the slope. The faint reference lines for 1:1, 2:1 and 3:1 show how far a better ratio shifts that threshold to the left: a wider target is almost always more effective than resolving to win more often.

Frequently asked questions

Win rate

Per trade

in R

Over 100 trades

20 %

-€92

-0.22 R

-€9,200

30 %

€68

0.17 R

€6,800

40 %

€228

0.55 R

€22,800

50 %

€388

0.94 R

€38,800

60 %

€548

1.33 R

€54,800

70 %

€708

1.72 R

€70,800

How this is calculated

The break-even win rate

Costs push the threshold up

Expectancy, not the single outcome

Why the curve is a straight line

Frequently asked questions