Your reward-to-risk ratio and the break-even win rate.
Educational tool only — not financial advice. Verify figures with your broker.
The Risk/Reward Calculator is a performance-planning tool that turns a trade's potential loss and potential gain into a single reward-to-risk ratio, then shows the win rate you'd need just to break even at that ratio. It answers: for the amount I'm risking versus the amount I'm targeting, how often must I be right to end up flat? It describes the arithmetic of a setup, not its odds of working.
Reward-to-risk ratio = reward distance divided by risk distance, where each distance is the gap in price between entry and target or entry and stop. The break-even win rate = risk divided by (risk + reward), equivalently 1 divided by (1 + reward-to-risk ratio), expressed as a percentage. A 2:1 reward-to-risk therefore needs about a 33% win rate to break even before costs.
There is no universally good number; a higher reward-to-risk lowers the win rate you need but usually means targets are hit less often. The risk reward calculator shows the trade-off rather than endorsing any single ratio.
No. A 2:1 ratio only tells you the break-even win rate (about 33%); profitability still depends on whether you actually hit that win rate, and on costs. The ratio is arithmetic, not a forecast.
The basic ratio is priced from entry, stop, and target only. Real costs raise the win rate you actually need above the break-even figure shown.
Keep in mind: The ratio and break-even win rate describe the arithmetic of one setup; they say nothing about how likely price is to reach your target rather than your stop. A favorable ratio is not evidence the trade will work, and the break-even figure ignores spread, commission, and slippage unless you account for them separately.