How it works
R expresses planned reward in multiples of planned price risk. It describes distances, not the probability of reaching a target. A larger multiple does not make a trade more likely to win.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
A long entry at $100, stop at $95 and target at $115 produces 3:1 reward-to-risk and a 25% pre-fee break-even win rate. For 20 units: $100 risk and $300 reward.
Calculation method
The pre-fee break-even win rate assumes every winner earns the same planned reward and every loser loses the same planned risk. Partial exits, missed fills and varying outcomes change this relationship.
Interpretation
With quantity and fees entered, the adjusted model adds the same round-trip cost to each loss and subtracts it from each win. If fees consume the entire reward, no positive net winning outcome remains.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- CME Group — Calculating futures profit or lossContract size and price-movement context; verify your broker or exchange specification separately.
- Investor.gov — Understanding FeesInvestment fee and compounding context; enter the terms of your fund or account.
Frequently asked questions
Does a high reward-to-risk ratio prove a trade is attractive?
No. The ratio compares price distances. It does not estimate the probability of reaching the target or account for every trading cost.
What is a worked example for Risk / Reward Ratio?
A long entry at $100, stop at $95 and target at $115 produces 3:1 reward-to-risk and a 25% pre-fee break-even win rate. For 20 units: $100 risk and $300 reward.