Is this trade worth the risk? Risk:reward calculator
Reward:risk = (target − entry) ÷ (entry − stop). To break even before costs you must win more than 1 ÷ (1 + reward:risk) of trades: 50% at 1:1, 33.3% at 2:1, 25% at 3:1. Size the trade so the stop loses only your chosen % of the account.
Last updated: · Free, no sign-up, nothing leaves your browser · Educational, not financial advice.
Breakeven win rate by reward:risk
| Reward : risk | Breakeven win rate (before costs) |
|---|---|
| 1 : 1 | 50.0% |
| 1.5 : 1 | 40.0% |
| 2 : 1 | 33.3% |
| 3 : 1 | 25.0% |
| 4 : 1 | 20.0% |
Formula: breakeven win rate = 1 ÷ (1 + reward:risk). Expectancy per trade in R (units of risk) = win rate × reward:risk − (1 − win rate). Position size = (account × risk %) ÷ |entry − stop|, rounded down.
Educational tool, not financial advice. It does not recommend any trade, market or broker. Trading carries a high risk of losing money, and leveraged products can lose more than you deposit.
How Chart Reader helps
Chart Reader explains any stock, crypto or forex chart screenshot in plain English: the trend, market structure, support and resistance zones, patterns, 2–3 conditional scenarios with invalidation levels, and position-size arithmetic for your own account size and risk % per trade. It is educational and never tells you to buy or sell.
100 chart reads cost £435 (£300 + 45% service fee), one-time; reads never expire. See an example read.
Questions
How do I calculate risk to reward?
Risk is the distance from your entry to your stop-loss; reward is the distance from your entry to your target. Divide reward by risk. Entry 100, stop 95 and target 110 risk 5 to make 10, so the reward:risk is 2:1 (often written as a 1:2 risk-to-reward).
What win rate do I need to break even?
Before costs, breakeven win rate = 1 ÷ (1 + reward:risk). At 1:1 you need to win 50% of trades, at 2:1 about 33.3% and at 3:1 25%. Fees and slippage push the real number a little higher.
How is position size worked out from risk %?
Money at risk = account size × risk %. Position size = money at risk ÷ risk per share or unit, rounded down. A £10,000 account risking 1% has £100 at risk; with a £5 stop distance that is 20 shares.
Is a higher risk:reward always better?
Not on its own. Far targets are hit less often, so a 4:1 setup with a low win rate can do worse than a 1.5:1 setup that wins more often. Expectancy combines both: win rate × reward:risk − loss rate, in units of risk (R).
Does this work for short trades?
Yes. If your stop is above your entry the calculator treats the trade as a short, and the target must be below the entry.
Is this financial advice?
No. It is arithmetic on the prices you enter and does not recommend any trade. Trading carries a high risk of losing money, and most retail traders lose money.